Explain what a residual policy implies
| One position expressed in the financial literature is that firms set their dividends as a residual after using income to support new investments. Explain what a residual policy implies (assuming that all distributions are in the form of dividends), illustrating your answer with a table showing how different investment opportunities could lead to different dividend payout ratios. |
f. Permission for corporations to deduct dividends for tax purposes as they now do interest charges
g. A change in the Tax Code so that both realized and unrealized capital gains
in any year were taxed at the same rate as dividends