Explain why dividend policy will be relevant in the presence of transactions costs, informational asymmetry and agency
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Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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1 Transactions costs are important because in the MM model it is assumed that the firm can pay a dividend and then issue shares to raise the money nee...View the full answer
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