This assignment analyzes the dividend policy and share price movement of BHP Billiton and ANZ Bank. It includes creating weights for different portfolios, determining if assets A and B are priced in accordance with CAPM model, and comparing dividend pay-out ratios of both companies. The dividend policy of BHP Billiton is to provide dividends to the investors as and when the overall net income of the company grows. However, during difficult times the company has provided higher dividend pay-out ratio to reduce the negative impact on its share price. The company recently in 2016 paid dividends, while making a loss from operations, which mainly rolled the dividend pay-out ratio negative. The overall share price movement of BHP Billiton mainly indicates a positive movement after the declaration of dividend and annual report. However, due to the change in dividend policy the overall negative impact on share price of the company substantially reduced. The increment in dividend policy ratio of ANZ Bank for 2016 drastically reduced the overall share price, while after the announcement the spike in shares could be seen. This is due to the adoption of changed dividend policy, where the company provided higher dividends even after obtaining low net profit after tax. The positive increment in share value of ANZ is also seen after the disclosure of dividend policy, which allowed the company to increase their share price even with low financial results.
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