Ibm corp | Business & Finance homework help
The payout policy of a firm over time can vary depending on prevailing economic conditions and the company’s overall strategy. Generally, there are two main strategies which firms can choose from – dividend payments or share buybacks. Dividend payments involve issuing cash to shareholders according to their holdings in the firm; whereas share buybacks involve purchasing outstanding shares from investors in order to reduce the total number of outstanding shares.
In terms of why a particular firm might choose one policy over the other – it would depend on numerous factors such as desired return levels from investors, cash flow position & future growth prospects etc. For example; if a company has large current liabilities then using dividend payments would be more suitable – allowing them to meet these obligations while still providing returns to shareholders afterwards.
On the other hand, if there is an expectation that profits will continue increasing due to potential expansion & acquisitions etc., then share buybacks could be used instead as this provides additional resources which can be reinvested back into the business going forward. Additionally, since repurchasing shares also reduces overall capitalization levels – this could help boost investor confidence due its positive implications regarding corporate governance.
Overall it is clear that firms need to carefully assess current market trends/conditions before deciding whether they should pursue either approach or even use both simultaneously when formulating their payout policies going forward. duration. T-bills are short-term investments with maturities of less than one year, while Treasury notes have longer durations ranging from two to ten years. This means that T-bills offer lower returns but also provide investors with more liquidity since they can be sold before maturity without incurring a penalty.
On the other hand, Treasury notes offer higher yields due to their extended duration and may be attractive for those looking for longer term investments. Furthermore, because the US government funds these notes via public auctions, investors have reasonable assurance that their money will not lose value & is relatively safe when compared to other asset classes such as stocks/equities.
Therefore it is important to properly assess your investment goals/risk tolerance in order to determine which option best suits your needs. For instance, if you require quick access to capital then investing in T-bills could prove beneficial whereas those seeking greater returns over prolonged periods should seek out Treasury notes instead. Ultimately though it comes down personal preference & a thorough evaluation of available options prior to making any decision.
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