There They Go Again

question 26

Essay

There they go again. There is another Burger King being built right next to a McDonald's at an Interstate Highway exit. Why does this approach make sense?

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Definitions:

Homemade Dividend Policy

A strategy in which investors create their own dividend policy by selling a portion of their portfolio of equities.

Residual Dividend Approach

A method used by companies to determine the dividend payments based on the residual or leftover earnings after all operational and investment costs have been met.

Regular Cash Dividend

is a fixed amount paid per share to shareholders, typically on a quarterly basis, from a company's earnings.

Residual Dividend Approach

A policy for setting a company's dividend payment, where the dividend paid is based on earnings minus funds the firm retains to finance the equity portion of its capital budget.