Question:

The term payout policy refers to the decisions that firms make about whether to distribute cash to shareholders, how much cash to distribute, and by what means the cash should be distributed.

Required:

(a) Contrast the basic arguments about dividend policy advance by Miller and Modigliani (M&M) and by Gordon and Linter.

(b) Describe a constant-payout-ratio dividend policy, a regular dividend policy, low regular and extra dividend policy. What are the effects of these policies?

It's a theory question asking about dividend policy advance by M&M and by Gordon Lintler.