It’s observed that there is often a conflict between a company's needs for funds and shareholders’ desire for current income. Companies have to maintain a fine balance while devising a dividend policy in order to please their investors as well as to meet their own funding requirements. There are certain ... Read More

A company’s dividend policy is influenced significantly by its shareholders’ desire for income. Shareholders usually want regular and increasing income from the companies they invest in. The companies that can pay increasing dividends are considered healthy by the shareholders and if a company shows such quality, the investors would want ... Read More

The assumption in the MM model that dividends and capital gains do not attract any tax is not applicable in the real world. Usually, both dividends and future payouts (capital gains) attract a significant amount of tax.Tax on Capital Gains is Less as Compared to DividendsThe tax brackets for capital ... Read More

A company’s dividend policy is influenced by its investment opportunities and the need for funds for its future projects. Generally, companies use retained earnings to source newer projects and expansion if they are in the growth phase. So, when it comes to paying dividends, growth companies often prefer to offer ... Read More

When it comes to pay dividends, companies may choose two paths. One is paying out the dividends as they are generated and the other one is paying it on a later payment cycle in the future. The latter is known as capital gains in financial terms. Now, which one is ... Read More

What are Hedge Funds?Hedge funds are a type of fund that actively participate in numerous other features than just buying and selling securities.A hedge fund may take short and long positions, trade options or bonds, deal in undervalued securities, and invest in any market activity where there is an opportunity ... Read More

Share buyback can be advantageous in numerous ways. Some of the advantages of buyback are as follows −Return of Surplus Cash to the ShareholdersA company that buys its shares back can offer surplus cash to its shareholders. This will increase the loyalty and confidence of the shareholders in the company. ... Read More

Random Walk TheoryIn a "random walk", a variable does not follow a trend and it moves at random. When we apply this theory to stock prices, it suggests that the stock prices move at random and it is impossible to predict their movement, either through fundamental or technical analysis.According to ... Read More

Although there are some distinct advantages of issuing bonus shares, it has some of its demerits too.Bonus Shares Do Not Increase the Wealth of ShareholdersThe issuance of bonus shares does not increase the wealth of shareholders as the shareholders may assume. It only makes the distribution of wealth more widespread. ... Read More

According to Walter’s Model, dividends are relevant and have a bearing on a company's share prices. It also advocates that the investment policy is interlinked with the dividend policy and the two cannot be separated.Walter's Dividend Theory is based on some assumptions that are needed to exactly classify the theory. ... Read More