a) Explain the dividend irrelevance argument. (4pts)

b) Explain the various factors that can lead to the relevance of corporate dividend policy. (6 pts)

c) there is a possibility, for an economy where shareholders have different tax rates on dividends versus capital gains, that dividend policy may be relevant to shareholders but not to firms. Explain how. Also explain how the foregoing analysis may be extended to an economy where investors have different levels of risk aversion. (5pts)