Term Answer Description Dividend A. If a shareholder opts to participate in this program, their dividends are automatically used to purchase additional shares of the firm's outstanding or newly issued stock. irrelevance theory Information B. According to this policy, the amount of dividends paid is equal to the amount of the firm's net earnings minus the amount of retained earnings necessary to finance the firm's optimal capital budget content hypothesis Holder-of-record date Residual dividend policy Stock split C. Under this dividend policy, a firm pays a constant proportion of its net earnings as dividends each year. An earnings distribution activity in which the firm's earnings are used to purchase outstanding shares of the paying firm in the financial markets D. E. This type of earnings distribution takes the form of the payment of additional shares of the paying firm, rather than the payment of cash. On this date, the firm closes its stock transfer, or stock ownership, book, and the shareholders recorded in the book will receive the firm's next declared dividend Constant payout ratio F. Dividend G. If a firm undertakes this activity, the number of shares owned by a individual shareholder will be increased, but their total value will be decreased proportionally. reinvestment plans Optimal dividendH. Under this theory, management is reluctant to increase their stock's policy annual dividend unless they have expectations of increased sustainable future earnings from which to pay the dividends. This dividend policy maximizes the value of a firm Stock dividend I. Stock repurchase J. This theory contends that a firm's dividend policy will not impact either the value of the firm or its cost of capital