BUSF_A01.qxd

Suggested answers to review questions

existing shareholder or to an outsider acceptable to the other shareholders. This

means that it is unlikely that the would-be departing shareholder can obtain a fair

value for the shares.

16.6Ideally, dividend policy should be based partly on the position of the shareholders

regarding matters such as need for a regular cash income and personal tax position.

It is not practical to know the personal circumstances of all of the shareholders in the

typical large business. With small businesses it is possible to know which dividend

policy most shareholders would prefer, and, therefore, to tailor dividend policy to

meet their needs.

BUSF_Z02.qxd 11/19/08 10:32 Page 473