On Optimal Dividend and Liquidation Policies for the Firm, II: Optimality of LRHD Policies

The study of optimal dividend, reinvestment, and liquidation policies for a single asset firm is continued. By assuming roughly that the probability distribution of net asset changes is PF2, that its mode is not too low, and that the probability of large losses is not too high, the curious band behavior which can appear in an optimal policy in the general case is eliminated.