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Q2. To avoid plagiarism, you should provide discussion in your own understanding. Your discussion is limited to a maximum of FIVE (5) pages and be as RELEVANT as possible. No marks will be awarded for irrelevant points and discussion exceeded 5 pages. (a) Shareholders provide funds to the firm and expect to be compensated with adequate dividends and ultimately capital gain. Explain the dividend policy in the corporate sector and discuss its implications relevant to the signaling effect and clientele effect. (25 marks) (b) The principal-agent problem is a conflict in priorities between a person or group and the representative authorized to act on their behalf. Explain with an example, how does a principal-agent problem arise in a corporate world. Within the agency context, discuss how does a maximisation of long-run expected cash flows to a firm is translated into maximisation of shareholders' wealth. (25 marks) [Total: 50 marks] here to search Elt 6296