Questions on Capital Finance

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The writer discusses for different topics relating to capital finance. The first section of the paper discusses how and why dividend policy may be relevant to the value of the firm utilizing Modigliani and Miller's Equity Arbitrage theorem. The second section considers the dangers of firms increasing their use of short-term debt. The third section of the paper discusses how a firms dividend policy may be influenced by consideration of personal taxation issues. The last section looks at why a firm that has a high gearing level may have a greater value than an ungeared firm. Four sources are cited in the bibliography this seven page paper.