Concept explainers
Dividend: The amount that shareholders receive in return of their investment is called as a dividend. The dividend is paid according to the number of share of each shareholder. Preference shareholder receives a fixed rate of dividend but equity shareholders receive dividend only when there is a profit in the company.
Dividend policy: Company has to take decisions regarding the payment of dividend. The dividend paid to the shareholder is out of the profit of the company. A dividend of the current year is the expected dividend to be paid by the company in the coming year.
To determine:
The expected price of the stock immediately after the firm pays a dividend.
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Fundamentals of Corporate Finance, Student Value Edition (3rd Edition) - Standalone book
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