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What are the advantages and disadvantages of the residual policy? (Hint: Don’t neglect signaling and clientele...

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Finance

What are the advantages and disadvantages of the residualpolicy? (Hint: Don’t neglect signaling and clientele effects.)

Discuss the advantages and disadvantages of a firm repurchasingits own shares.

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The advantages and disadvantages of residual policy The primary advantages of such kind of policy is that 1 the firm can have the maximum use of retained earnings which comes at a lower cost this would result in 2 minimization of floating cost and hence overall cost of capital Negative signals related to stock issues would be avoided through this policy However under this policy the dividend payment may    See Answer
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