Question

5 The Board of Directors announces on August 17, 2020 a $1.20 dividend to be paid to shareholders of record on Wednesday, August 26th, to be received on September 15th. Sarah Grosaner plans to purchase the stock and recieve the dividend. What is the last date Sarah can purchase the stock, and recieve the dividend a Wednesday August 26 b. Thursday August 27 c. Friday August 28 d. Monday August 31 e. none of the above 6 Theory that investors care only about total return (combined dividend and capital gain) a free cash flow hypothesis b clientele effect c dividend irrelevance theory d residual dividend policy d none of the above

Answer 1

Q5:

option E: none of the above

---since August 26th is record date; the share has to be purchased 2 days before this date and in options it is not given

Q6:

option C

Dividend irrelevance theory is the one which suggest that investors doesnt differentiate between company growth and paying of dividend. and Residual dividend policy is based on this theory