Dividends and Share Repurchases

Free CFA Level II lesson in Corporate Issuers. 13 min read, ~1,902 words.

MM irrelevance is the benchmark under perfect markets; every competing theory names one specific friction (taxes, signaling, agency costs, clientele, uncertainty preference) that makes dividends matter. Signaling: dividend increases signal management confidence, cuts signal pessimism; the signal is credible because unsustainable increases are costly to reverse. Lintner model: Expected dividend...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• dividends and repurchases

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