An assumption of the MM dividend irrelevance proposition is:
A) investors are willing to pay higher prices for shares with higher payouts.
B) capital gains are offset by receiving no dividend.
C) extra cash dividends are offset by a capital gain.
D) extra cash dividends are offset by a capital loss.

Question

Quizplus · Accepted Answer

The MM dividend irrelevance proposition assumes that any extra cash dividends paid out by a company will result in a capital loss of the same amount, leaving the investor's wealth unchanged.

An Assumption of the MM Dividend Irrelevance Proposition Is