On the optimality of joint periodic and extraordinary dividend strategies

In this paper, we model the cash surplus (or equity) of a risky business with Brownian motion (with drift). Owners can take out in form “dividends”, subject to transaction costs. However, if hits 0 then ruin occurs and cannot operate any more. We consider two types dividend distributions: (i) periodic, regular ones (that is, dividends be paid only at countably many points time, according specific arrival process); (ii) extraordinary payments that made immediately time decision space is continuous matches process). Both attract proportional costs, but distributions also fixed which realistic feature. A strategy involves both (periodic extraordinary) qualified as “hybrid”. determine strategies (either immediate, or hybrid) are optimal, show maximise expected present value until ruin, net Sometimes, liquidation (which pays all monies stops process) optimal. Which optimal depends on profitability business, level (proportional fixed) Results illustrated.