Required:

(b). The question of the effect of dividends on share prices has been a controversial one for many years. Two differing theoretical schools of thought are prevalent within this area, one supporting dividend relevance, and the other providing support for dividend irrelevance. Critically evaluate the two schools of thought; ensuring the evaluation is developed with relevant academic evidence.(35 marks)

In this section students should demonstrate both understanding and knowledge of the dividend relevance and irrelevance theoretical viewpoints. The discussion / evaluation should be supported with relevant empirical research that has been performed within this area and should be referenced accordingly. The inclusion and ability to integrate real-life practical business examples, addressing whether differing companies adopt a dividend relevance or irrelevance standpoint would assist in developing the response in greater depth and detail.