Under the Modigliani and Miller dividend irrelevance argument,a company's value:
A)is independent of its dividend policy.
B)is dependent on its dividend policy.
C)and investment policies are mutually exclusive.
D)and investment policies are independent.

Question

Quizplus · Accepted Answer

According to the Modigliani and Miller dividend irrelevance argument, a company's value is independent of its dividend policy. It suggests that in a perfect capital market, the value of a firm is determined solely by its earnings and the risk of its underlying assets, not by whether it pays dividends or retains earnings. Therefore, dividend policy does not affect the value of the firm.

Under the Modigliani and Miller Dividend Irrelevance Argument,a Company's Value