MM's proposition concerning dividends contends that shareholders will:
A) offer higher prices for higher dividend payouts.
B) not offer higher prices for higher dividend payouts.
C) offer higher prices for lower dividend payouts.
D) purchase only stocks that have high dividend payouts.

Question

Quizplus · Accepted Answer

MM's proposition argues that dividend policy does not affect the firm's value or the shareholders' wealth. Therefore, shareholders will not offer higher prices for higher dividend payouts.

MM's Proposition Concerning Dividends Contends That Shareholders Will