 From free cash flows, a firm can retain the amount or the firm can distribute this amount among its shareholders. Now as a second option, the firm can pay this amount as cash dividend to its shareholders or the firm can use this amount to repurchase its own outstanding shares from its current shareholders. Now these decisions regarding dividend payouts are termed as the firm's dividend policy. So for a dividend is concerned, dividends are in fact the firm's cash flows and the timing and payment of these cash flows to the firm's shareholders as dividend are determined by the firm's board of directors. Since the declaration date, the firm is legally bound to make payment on dividend to its shareholders and declaration date is the date at which the payment rate and amount of dividend is announced or declared by the company. The dividend paid to all of the shareholders of a firm who are registered with the firm on a certain day of time and that day of time is termed as the record day and after record there is another term that is ex-dividend. Ex-dividend means it is the day prior to the record date and after this date no person that purchases a share from another shareholder of the company is allowed to take dividend from the firm. There is another day that is termed as the payable date. This is the date that at which dividend is paid to the shareholders of the firm and these are the registered shareholders whose names appear on the record day in the register of the firm. This may be dividends at regular and quarterly intervals. Accompany me issue is on additional shares to its shareholders. These additional shares are issued to the shareholders at three of cost and these are termed as the stock dividend. Dividends generally reduce the firm's retained earnings because in shape of dividends profits are distributed among the shareholders of the company and they travel from companies retained earnings to the shareholders' pockets. Then we have liquidating dividend that may also take form of add-in capital or the liquidation of assets of the firm. Apart from cash dividends, another form of dividend to the shareholders is the shares repurchase. And this is an alternative to the cash dividend. So in this form, the dividend may take form of share repurchase or a buyback by the firm of its outstanding shares from its current shareholders. Such repurchase shares are held by the firm in its treasury stocks. These repurchase shares can also be reissued to the general public whenever the firm needs money in the days to come. There are three modes in which this repurchase of shares can take place. These modes are open market repurchase, tender offer and targeted repurchase. In open market repurchase, the firm announces in the share market a price and the quantity of shares at which the shareholders come back to the firm and they surrender their shares to the firm against the announced price. And in tender offer, repurchase can be there through our tender offer at a preset price by the firm. And that tender offer needs to take place during a stipulated period of time. And this transaction occurs at a substantial premium paid by the firm to its shareholders. And that forms a market price for the share of the company. Then third mode of repurchase is the targeted repurchase where the firm may target a shareholder who holds a substantial or larger part of the shareholding of the firm. And the firm offers to that person a share repurchase at a negotiated price.