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Which of the two dividend policies steady or fluctuating dividends would you recommend?
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Which are the fluctuating dividend policies?
this policy is that policy which is fluctuating in nature and the shareholders do not generally go for this dividend policy.
Equality of result policies are primarily directed at?
religious
Is not a tool of a rational choice?
Devising monetary policies.
What is AR-735-5?
Policies and procedures for property accountability
What is the importance of statistics to political science and international relations?
Statistics allow governmental entities to easily digest information. They can use that information to make new policies and determine if policies are working.
Advantages and disadvantages of dividend policy?
The advantages of dividend policies are that they provide an outline of what the investor can expect from the company regardless of what the policy is. Stable dividends are typically preferred over fluctuating dividends. The main disadvantage of dividend policies is that is they are too generous, the company may struggle and if they attempt to reduce the dividend then investor's can become disenchanted as it is considered a cut in pay.
Which are the fluctuating dividend policies?
this policy is that policy which is fluctuating in nature and the shareholders do not generally go for this dividend policy.
What is dividend theories and policies?
Dividend policies are concerned with the financial policies that have to do with how, when, and how much regarding paying cash dividend. Dividend policy theories explain the reasoning and arguments that relate to paying dividends by firms Dividend theories include the dividend irrelevance theory that indicates there is no effect on the capital structure of a company or its stock price from dividends.
What is the difference between dividend paid at the end of the financial year and interim dividend?
final dividend is paid after close of financial year.interim dividends are paid during financial year depending upon company financial health & policies.
What are the different types of dividend policies?
Types of Dividend Policy:a. Stable Dividend Policyb. Fluctuating Dividend Policyc. Small Constant Dividend per Share plus Extra Dividend.Forms of Dividend· Cash DividendCash dividends(most common) are those paid out in the form of a cheque. Such dividends are a form of investment income and are usually taxable to the recipient in the year they are paid.This is the most common method of sharing corporate profits with the shareholders of the company. For each share owned, a declared amount of money is distributed. Thus, if a person owns 100 shares and the cash dividend is $0.50 per share, the person will be issued a cheque for 50 dollars.· Stock DividendStock or scrip dividends are those paid out in form of additional stockshares of the issuing corporation, or other corporation (such as itssubsidiary corporation).They are usually issued in proportion to sharesowned (for example, for every 100 shares of stock owned, 5% stockdividend will yield 5 extra shares). If this payment involves the issue ofnew shares, this is very similar to a stock split in that it increases the totalnumber of shares while lowering the price of each share and does notchange the market capitalization or the total value of the shares held.
What are dividends paid on life insurance policies considered to be?
The dividends paid on life insurance policies by the insurer are called reversionary bonus which varies yoy.
What are the dividends paid on life insurance policies considered to be?
The dividends paid on life insurance policies by the insurer are called reversionary bonus which varies yoy.
What describes dividends paid on life insurance policies?
A dividend represents a distribution of earnings made by a mutual life insurance company to its policyholders. From the standpoint of corporate structure, a mutual company is owned by the policyholders--therefore, they benefit from the earnings. The distribution may be in cash, by additional paid-up insurance, or in some other form. The insureds designate how they want dividends distributed to them when they apply for insurance through the insurer.
What is the difference in participating life policies and non participating life policies?
Participating policies are life insurance policies that pay dividends, where dividends enable you (the policyholders) to participate in the insurance company's favorable experiences (such as higher than expected investment returns or lower than expected operation.) Non-participating policies, historically belong to the stock companies where the company's favorable expenses were paid to the stock holders, rather than the people who own policies within the insurance company. Even though the participating policies were mostly offered by the the mutual insurance companies, due to consumer appeals to receive dividends, stock companies also started offering participating policies. You should keep in mind that the dividends are not guaranteed and it is illegal for insurance agents to make future projections (where the participating policies also tend to have little higher premiums.)
What type of life insurance policy pays dividends whole life or equity or partcipating or nonforfeitable?
Question - What type of life insurance pays dividends? Answer - Dividends are paid by participating life insurance policies. The word "participating" suggests that the owner of the policy would get a dividend on the policy if the company earns one. A life insurance company cannot guarantee a dividend as this depends on the performance of the company. Investment performance as well as operating costs come into play. Whole life policies are participating policies. Details: http://www.lifeinsurancehub.net/life-insurance-dividends.html Question - What are "equity" linked policies? Answer - Equity linked policies are life insurance policies that, to put it simply, are hooked up with an investment portfolio...like mutual funds for example. Examples are variable universal life insurance policies and variable life insurance policies. These policies are sold only by "prospectus". The agent must have an NASD license to sell these policies. This license is different from his regular life insurance license. Details: http://www.lifeinsurancehub.net/variablelifeinsurancequote.html Question - What are nonforfeiture values? Answer - If at any time in the future a policy owner wishes to terminate premium payment of a participating life insurance policy policy there are certain option made available by the life insurance company. S/he may surrender the policy for its cash value, extended term life insurance may be purchased with the cash values or the cash values may be applied to purchase a reduced paid up policy. Details: http://www.lifeinsurancehub.net/nonforfeiture-values.html
What are the major differences between a mutual company vs a mutual holdings company?
A mutual life insurance company is an entity controlled by the owners of the participating (dividend paying) policies in force in that company. These are usually whole life policies. The dividends come from the companies divisible surplus. It is apportioned through complex formulae that take into account the profitability of the various series of policies in force. Factors such as better than expected mortality results, higher earnings than anticipated and savings in expenses are passed along in the form of policy dividends. Since mutual companies have no stockholders, there is no one other than the policy owners to assume the risks involved in running the company. Traditionally, mutual companies' policies have higher premiums than non-dividend paying policies from stock holder owned companies. The dividends are therefore, a return of an excess premium charge and are not dividends in the traditional sense. Most mutual life insurance companies (Prudential, MetLife, Equitable, John Hancock) converted to stock companies in the 1990s in order to better access capital markets. Others (Pacific Life, Mutual Trust) took the intermediate step of becoming mutual holding companies (MHC). The mutual company created a stock subsidiary to offer policies to the public and to conduct other related business. The stock subsidiary is wholly owned by the parent mutual company even though the mutual company no longer actively operates as a life insurance company. The policyholders of the mutual company are issued stock in the new company, or are given a cash payment that represents their share of the divisible surplus of the company. The insurance policies remain inforce for the same amount of coverage and the same premium payment. Dividends are still paid on the participating policies. Some times, the new MHC acts like a traditional mutual company emphasizing dividend paying whole life policies. In other examples, the new MHC acts more like a stock company in its product offerings, but still tend to pass along improvements to policy owners.
How does Walter formula of dividend distribution help in understanding the dividend policies?
The term dividend refers to that part of after-tax profit which is distributed to the owners (shareholders) of the company. The undistributed part of the profit is known as Retained earnings. Higher the dividend payout, lower will be retained earnings.The dividend policy of a company refers to the views and policies of the management with respect of distribution of dividends. The dividend policy of a company should aim at shareholder-wealth maximization.The essence of dividend policy is:If the company is confident of generating more than market returns then only it should retain higher profits and pay less as dividends (or pay no dividends at all), as the shareholders can expect higher share prices based on higher RoI of the company. However, if the company is not confident of generating more than market returns, it should pay out more dividends (or 100% dividends). This is done for two reasons. One, the shareholders prefer early receipt of cash (liquidity preference theory) and second, the shareholders can invest this cash to generate more returns (since market returns are expected to be higher than returns generated by the company).Over the years, various models have been developed that establish the relationship between dividends and stock prices. The most important of them is Walter Model:Walter ModelProf James E. Walter devised an easy and simple formula to show how dividend can be used to maximize the wealth position of shareholders. He considers dividend as one of the important factors determining the market valuation. According to Walter, in the long run, share prices reflect the present value of future stream of dividends. Retained earnings influence stock prices only through their effect on further dividends.Assumptions:The company is a going concern with perpetual life span.The only source of finance is retained earnings. i.e. no other alternative means of financing.The cost of capital and return on investment are constant throughout the life of the company.According to Walter Model,P = [D + (E - D) x ROI / Kc] / KcP= Market price per share E= Earnings per shareD = Dividend per share Kc= Cost of Capital (Capitalization rate)ROI = Return on Investment (also called return on internal retention)The model considers internal rate of return (IRR), market Capitalizatio rate (Kc) and dividend payout ratio in determination of share prices. However, it ignores various other factors determining the share prices. It fails to appropriately calculate prices of companies that resort to external sources of finance. Further, the assumption of constant cost of capital and constant return are unrealistic.If the internal rate of return from retained earnings (RoI) is higher than the market capitalization rate, the value of ordinary shares would be high even if the dividends are low. However, if the RoI within the business is lower than what market expects, the value of shares would be low. In such cases, the shareholders would expect a higher dividend.If RoI > Kc, Price would be high even if Dividends are lowWalter model explains why market prices of shares of growth companies are high even if dividend payout is low. It also explains why the market prices of shares of certain companies which pay higher dividend and retain low profits are high.Example:A Ltd. paid a dividend of Rs 5 per share for 2009-10. the company follows a fixed dividend payout ratio of 30% and earns a return of 18% on its investments. Cost of capital is 12%. The expected price of the shares of A Ltd. using Walter Model would be calculated as followsEPS = Dividend / payout Ratio = 5 / 0.30 = Rs.16.67According to Walter Model,P = [D + (E - D) x ROI / Kc] / KcP = [5 + 16.67 - 5.00) x 0.18 / 0.12] / 0.12P = 187.50
