1. Explain how the assumptions behind the perfect (or ideal) capital market lead to Modigliani and Millers (or Miller and Modiglianis) irrelevance theories for (a) capital structure and (b) dividend policy.
2. Explain how asymmetric information affects the capital structure decision.
3. Explain how the agency problem and corporate governance influence the dividend policy.
4. Compare and contrast dividend payments with share repurchases. What reasons explain the increase use of share repurchases as a method to return funds to shareholders?
5. Explain the pecking order hypothesis. Explain why firms tend to use internal funds.