The manager of XYZ Corp.feels that a dividend increase will increase stock price because many investors value stock with a dividend-discount model.Why might MM disagree with this assertion?
A) The increased dividend makes the firm much riskier.
B) Future dividend growth may slow due to lower retained earnings.
C) Investors prefer capital gains over dividends.
D) Dividend increases will increase the book value but not the market value of the firm.
Correct Answer:
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