Assuming a perfect market, a corporation can create value only by

Question

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In a perfect market, the value of a corporation is determined solely by the information available to all market participants. Any action taken by the corporation, such as paying dividends or changing its capital structure, will already be reflected in the market price of the stock. Therefore, no action taken by the corporation can create value in a perfect market. Assuming a perfect market, value is already reflected in the stock price and any actions taken by a corporation, such as paying out dividends, making changes to its capital structure, or splitting its stock, will not create additional value for shareholders. The only way for a corporation to truly create value in a perfect market would be to make investments or take actions that increase the company's profitability and ultimately raise the stock price.

Assuming a Perfect Market, a Corporation Can Create Value Only