Problem
1. Outline the practical issues that will impact on a financial manager, when deciding on the next annual level of dividend payment to shareholders. Your discussion should include an explanation of the Signalling Hypothesis and the Clientele Effect. Conclude by briefly comparing dividend payments and share repurchases.
2. Dividend policy is determined by senior management. Outline both the legal and the practical constraints that they face. Develop your answer with a description of Lintner's stylised facts regarding how dividend policy is determined. Conclude with a brief review of available research evidence.
3. Define both semi-strong form and strong forms of market efficiency, and explain how each normally is tested. Conclude by identifying a number of examples of market anomalies, and discuss whether they can be considered as evidence that financial markets may not be efficient.
4. Explain the idea of an Efficient Market, and consider its importance. Develop your answer with a description of the random walk hypothesis, and consider if the available evidence is supportive of weak form efficiency.