MAC3761 STUDY SUMMARY NOTES EXAM
SCRIPT 2026 FULL QUESTIONS AND
CORRECT ANSWERS
⩥ What is the Tax-Preference Theory? Answer: Dividend Policy of co is
relevant to value of firm
Higher dividend payouts reduce sh value when dividends are taxed at a
higher rate than capital growth
⩥ How does the constant dividend/earnings policy treat dividends?
Answer: Pays sh's a dividend which is calculated at a constant
percentage of earnings
⩥ How does the Residual dividend policy treat dividends? Answer:
Dividend payed after taking into account:
-capital expenditure that investments require and
-other working capital requirements and
-other operational needs
paid on residual amount of equity generated after firms current financial
obligations have been met
⩥ How does the Zero Payout policy treat dividends? Answer: -Firms
may not pay dividends due to:
, -insufficient profits or;
-as voluntary choice and prefer alternative forms of distribution to
shareholders
⩥ What are the three types of dividend payments(in terms of timing) that
are common in South Africa? Answer: -Interim Dividend
-Final Dividend
-Special Dividend
⩥ What is the interim Dividend? Answer: -Normally declared in the
middle of accounting reporting period when interim results are issued
⩥ How does the JSE define an interim dividend? Answer: a dividend
after a reporting period eg 6montly
⩥ What is the Final Dividend? Answer: Declared at the end of the
accounting period when final annual results are issued
⩥ How does the JSE define the final dividend? Answer: a Dividend
declared for the financial year-end
⩥ What is the Special Dividend? Answer: Issued over and above final
dividend payment
SCRIPT 2026 FULL QUESTIONS AND
CORRECT ANSWERS
⩥ What is the Tax-Preference Theory? Answer: Dividend Policy of co is
relevant to value of firm
Higher dividend payouts reduce sh value when dividends are taxed at a
higher rate than capital growth
⩥ How does the constant dividend/earnings policy treat dividends?
Answer: Pays sh's a dividend which is calculated at a constant
percentage of earnings
⩥ How does the Residual dividend policy treat dividends? Answer:
Dividend payed after taking into account:
-capital expenditure that investments require and
-other working capital requirements and
-other operational needs
paid on residual amount of equity generated after firms current financial
obligations have been met
⩥ How does the Zero Payout policy treat dividends? Answer: -Firms
may not pay dividends due to:
, -insufficient profits or;
-as voluntary choice and prefer alternative forms of distribution to
shareholders
⩥ What are the three types of dividend payments(in terms of timing) that
are common in South Africa? Answer: -Interim Dividend
-Final Dividend
-Special Dividend
⩥ What is the interim Dividend? Answer: -Normally declared in the
middle of accounting reporting period when interim results are issued
⩥ How does the JSE define an interim dividend? Answer: a dividend
after a reporting period eg 6montly
⩥ What is the Final Dividend? Answer: Declared at the end of the
accounting period when final annual results are issued
⩥ How does the JSE define the final dividend? Answer: a Dividend
declared for the financial year-end
⩥ What is the Special Dividend? Answer: Issued over and above final
dividend payment
