Question

The dividend policy must be formulated considering two basic objectives, namely ________. delaying the tax liability of the stockholder and information content maximizing shareholder wealth and maintaining liquidity maximizing shareholder wealth and providing for sufficient financing maintaining liquidity and minimizing the weighted average cost of capital

Answer 1

The correct answer to the student's question is that the dividend policy must be formulated considering two basic objectives: maximizing shareholder wealth and providing for sufficient financing. A firm needs to balance between offering dividends and reinvesting profits to ensure sustainable growth and financial stability.

Step-by-step explanation:

The dividend policy must be formulated considering two basic objectives, which are maximizing shareholder wealth and providing sufficient financing. When a firm decides to issue stock, it recognizes that investors expect a return on their investment. This return can be delivered through dividends, which are direct payments to shareholders, or through capital gains, which is the increase in the value of the stock between when it is bought and when it is sold. A well-considered dividend policy takes into account these aspects, balancing immediate shareholder rewards with the need for reinvesting profits to promote further growth and maintain financial health.

Answer 2

The dividend policy must be formulated considering two basic objectives, namely maximizing shareholder wealth and providing for sufficient financing.

A dividend is defined as an amount of money paid by a company to its shareholders out of their provides. The main goals is that it gives the shareholders the most value for their time/money.. the shareholders want a large return. Also, the company wants to make sure they have enough profit/cash on hand to have a large financing amount.