1. How would a company's leverage (or debt to equity ratio) change (increase/decrease/unchange) after the following corporate actions? (a) a share repurchase (b) a payout of cash dividends (c) a payout of stock dividends (d) a 2-for-1 stock split 2. Although we say that a firm's dividend policy does not matter in an ideal world without frictions (i.e. no taxes, no transaction or issuance costs), in practice, we often observe firms that announce a dividend cut experience a decline in stock prices and firms announcing a dividend hike experience an increase in stock prices after the announcements. What are the possible reasons for the price changes after these dividend announcements