MM's assertion that dividend policy will not affect the value of the firm requires that dividend policy does not:

Question

Quizplus · Accepted Answer

MM argues that the value of the firm is determined by its investments, risk, and financing decisions, and not by its dividend policy. Therefore, as long as the dividend payment does not affect the firm's investment and borrowing policies, MM's argument holds. The other choices may affect the dividend policy and/or the value of the firm, which goes against MM's proposition.

MM's Assertion That Dividend Policy Will Not Affect the Value