MM's proposition concerning dividends contends that shareholders will:
A)offer higher prices for higher dividend payouts.
B)not offer higher prices for higher dividend payouts.
C)offer higher prices for lower dividend payouts.
D)only purchase stocks that have high dividend payouts.

Question

Quizplus · Accepted Answer

According to MM's proposition, dividend policy does not affect the stock price or shareholder wealth. Therefore, shareholders will not offer higher prices for higher dividend payouts.

MM's Proposition Concerning Dividends Contends That Shareholders Will