1) According to Miller and Modigliani dividend policy is irrelevant. Discuss in depth their theory of dividend irrelevance using a suitable numerical examples.
2) Discuss in depth the empirical evidence in favour and against Miller and Modigliani hypothesis and alternative theories that have been proposed to explain the empirical evidence that explain company dividend policy better than Miller and Modigliani hypothesis.
3) In the current climate of very low interest rates and low energy prices, energy companies such as British Petroleum are forced to pay dividends despite sustaining large annual losses. In light of the existing empirical evidence to date, discuss with appropriate reasons, whether these companies are paying their shareholders with one hand and taking it away with another.
You should refer back to lecture material.
In order to successfully complete this essay, you need to make extensive use of the relevant literature, both academic and from the practitioner perspective. It is also important to be able to offer an informative and fact based view on the issues discussed. Avoid unreliable sources and base your answers on academic and policy papers, as well as articles from well respected press (like Financial Times and The Economist). Be concise, succinct but, at the same time, provide well developed arguments.
The client would like graphics, tables and diagrams to be referenced.
This should be written in an essay format – not a report.
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