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Dividend Irrelevance Theory
The Dividend Irrelevance Theory posits that a company's dividend policy does not affect its market value or shareholders' wealth in perfect markets.
Basic Earning Power
A measure of a company's operating profitability relative to its assets; calculated as EBIT (Earnings Before Interest and Taxes) divided by total assets.
Business Risk
The exposure a company or investor faces due to uncertainties in the market or failures in executing its operational strategies, affecting its profitability.
Dividend Irrelevance Theory
A theory proposing that an organization's dividend policy is not relevant to the value of the company or its cost of capital, assuming perfect market conditions.
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