Finance

A cash dividend profits a shareholder by providing an immediate return on the investment while a periodic share repurchase program may or may not benefit a shareholder depending on the market price of the stock. Even though a share repurchase program creates demand for the shares in the market that does not mean that the price of the stock will definitely appreciate and benefit a shareholder.

A stock dividend is paid in securities or the form of stock rather than cash.  It will generally not be taxable while a cash dividend requires the payment of taxes. But at current tax rates, a qualified dividend is only taxed at a 5% or 15% rate versus ordinary income tax rates that could be as high as 25 - 35%. If the stock has significant growth potential I think a stock dividend is more appealing.

A stock split is the issuance of a larger number of shares in proportion to the existing shares outstanding.  Stock splits lower the price of the stock, which makes it more attractive and available for investors which may create more demand for the stock and push the price up. Studies have shown that this occurs in the short term but not necessarily in the long term.

1.    Explain some disadvantages of Cliff's current investment approach.

 One disadvantage is him not keeping track of investments. Having made the investments Cliff should have kept a track of them. He should hold on to the investments that are doing well and sell the ones that are not.

Another disadvantage is investing without any specifics. Each investment made should have a purpose.. Different investments have different risks and returns and these should be kept in mind while investing

Also Cliff has no Dollar amount as target.  While investing, it is essential to have the final value that one wishes to get. Without the target, it is difficult to put aside any amount of money.

Another disadvantage is that the money has been put in bonds and stocks. This means that he should include...