Last Minute

1. The probability of financial distress

2. The magnitude of the costs after a firm is in distress

• Financial distress costs will vary by industry. E.g. Real estate firms are likely to have low costs of financial distress because the majority of their assets can be sold relatively easily

3. The appropriate discount rate for the distress costs

• Depends on the firm’s market risk: Because distress costs are high when the firm does poorly, the beta of distress costs has the opposite sign to that of the firm.

The board of directors authorizes the payment of a dividend.

Only shareholders on record on this date receive the dividend

A date, two days prior to a dividend’s record date, on or after which anyone buying the stock will not be eligible for the dividend

A date, generally within a month after the record date, on which a firm mails dividend checks to its registered stockholders.