The residual theory of dividends tends to suggest that the required return of investors is not influenced by the firm's dividend policy and, thus, dividend policy is irrelevant.

Question

Quizplus · Accepted Answer

The residual theory of dividends posits that dividends are paid only after all acceptable investment opportunities are funded, implying that dividend policy does not affect the firm's value or investors' required return.

The Residual Theory of Dividends Tends to Suggest That the Required