Which of the following states that, all else equal, dividend-paying companies are less risky than non-dividend-paying companies?
A)Residual dividend model
B)Modigliani and Miller dividend irrelevance model
C)The "bird in the hand" model
D)The signalling model

Question

Quizplus · Accepted Answer

The "bird in the hand" model asserts that dividends are attractive to investors because they represent a guaranteed return on investment, whereas future capital gains are uncertain. This implies that dividend-paying companies are less risky than non-dividend-paying companies, all else equal. The other choices are not directly related to the relationship between dividends and risk.

Which of the Following States That, All Else Equal, Dividend-Paying