During the committee's initial meeting, you discussed how the "clientele effect" should receive a major consideration in devising an effective dividend policy for Axetem. You also discussed other factors that can also influence a company's dividend policy. Following your meeting, one of the members of the steering committee e-mails you with some follow-up questions.

• What is the purpose of a dividend policy?
• What 3 factors influence the direction of a dividend policy?
• How does the implementation of or changes to a dividend policy usually affect stock prices?

What recommendations can you provide moving forward?