MM's proposition of dividend irrelevance depends upon:

Question

Quizplus · Accepted Answer

MM's proposition of dividend irrelevance assumes that capital markets are perfectly efficient, meaning that investors have all the necessary information to make rational investment decisions. In such a market, the firm's decision to pay dividends or retain earnings would not affect the value of the firm or the wealth of its investors, as they could create their desired cash flows through selling shares if necessary.

MM's Proposition of Dividend Irrelevance Depends Upon