Strategic Financial Management

1

ISS RATHORE INSTITUTE ISS

Strategic Financial Management

By CA. Gaurav Jain

100% Coverage More than 300 Concepts covered

in Just 25 Classes +

2 Theory Classes

All Classes At: 1/50 iSS Building, Lalita Park, Laxmi Nagar, New Delhi- 110092 Contact Details: 08527336600 / 011- 43073355

Email: gjainca@

CA. Gaurav Jain 2

Strategic Financial Management

Strategic Financial Management

List of Chapters Covered:

1. Dividend Policy 2. Bond Valuation 3. Mutual Fund 4. Portfolio Management 5. Futures 6. Options 7. Foreign Exchange Risk Management (FOREX) 8. Valuation of Business 9. Merger and Acquisition 10. Leasing 11.Capital Budgeting 12. Miscellaneous 13. Last year Exam Paper

Page No.

3 26 49 54 83 97 124 151 159 169 180 195 214

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Strategic Financial Management

DIVIDEND POLICY

Lists of Concepts

Related Question Numbers

Concept No. -1: Introduction

Concept No. - 2: Dividend Yield, Dividend Pay-out

1

Concept No. - 3: EPS, DPS, MPS Concept No. - 4: Dividend Payment Chronology Concept No. - 5: Dividend Policy(Models / Theory) Concept No. - 6: Gordon's Model/Growth Model/ Dividend discount Model Concept No. - 7: Determination of Growth rate Concept No. ? 8 : MM Approach (IRRELEVANCE THEORY)

2 3,4,5 6,7

8 9

Concept No. ? 9 : Multi-stage Dividend discount Model [ If g >Ke ] 10

Concept No. ? 10 : Present Value of Growth Opportunity (PVGO) 11

Concept No. ? 11 : Application of Floating Cost

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Concept No. ? 12 : Application of P / E Ratio

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Concept No. ? 13 : Redical Approach

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Concept No. ? 14 : IRR Technique & Growth Model

15

Concept No. ? 15 : Over ? Valued & Under ? Valued Shares

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Concept No. ? 16: Holding Period Return (HPR)

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Concept No. ? 17: Negative Growth

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Concept No. ? 18: Approaches to Dividend

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Concept No. ? 19: P / E Ratio at which Dividend payout will have 20 no effect on the value of the share

Concept No. ? 20: Return on Equity 21

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Strategic Financial Management

Concept No. ? 21: Book Value Per Share (BVPS)

22

Concept No. ? 22: Maximum Dividend

23

Concept No. ? 23: Price at the end of each year

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Concept No. ? 24: Graham & Dodd Model (traditional Approach) 25

Concept No. ? 25 : Linter's Model

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Concept No. ? 26 : Increase or Decrease in MPS due to

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Investment in new Project

Concept No. ? 27 : Maximization of Shareholder's Wealth

28

Concept No. ? 28: If EPS0 or EPS1 is given

Concept No. ? 29: Preference Dividend Coverage Ratio & Equity Dividend Coverage Ratio

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Strategic Financial Management

Concept No. - 1: Introduction Dividend Policy divides net earnings into retained earnings and dividends.

Total Earnings

Retained Earnings

Dividends

Two types of decision are taken in Dividend Policy:-

(i) Long-term financing decision (ii) Wealth maximization decision Internal Financing & External Financing :Internal source of financing means using own funds i.e. Retained Earnings. External source of financing means taking funds from outside i.e. Equity Share Capital, Preference Share Capital, Debentures, Bonds, etc. Internal financing is generally less expensive because firm doesn't incur any floating cost to obtain it. Factors Effecting Dividend Policy:1. Financial needs of the company 2. Desire of Share Holders 3. Funds Availability 4. Industry Trend 5. Legal Constraints 6. Cost of Capital & Internal rate of return 7. Ownership/Control 8. Discretion of Management 9. Liquidity needs of Company 10. Stability of Dividends

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