The indifference proposition regarding dividend policy:
A) Assumes that tax rates increase at the same rate as inflation
B) Assumes that investors are indifferent about the timing of dividend payments
C) States that investors are indifferent between stock dividends and cash dividends
D) States that investors are indifferent between stock repurchase and cash dividends

Question

Quizplus · Accepted Answer

The indifference proposition regarding dividend policy states that investors are indifferent about the timing of dividend payments, meaning they are equally satisfied with receiving dividends now versus receiving them in the future. It does not address tax rates or the choice between stock dividends and cash dividends versus stock repurchases.

The Indifference Proposition Regarding Dividend Policy