Which of the following statements would be consistent with the Dividend Irrelevance Theory?
A) There is no relationship between a firm's dividend policy and the value of its common stock.
B) Perfect capital markets are assumed to exist which allow investors to buy and sell stock without incurring any transaction costs.
C) Investors are indifferent whether stock returns come from dividend income or capital gains income.
D) All of the above.

Question

Quizplus · Accepted Answer

The Dividend Irrelevance Theory states that a firm's dividend policy does not affect the value of its common stock. It assumes perfect capital markets with no transaction costs and that investors are indifferent to whether they receive returns from dividend income or capital gains income. All of these statements are consistent with the Dividend Irrelevance Theory.

Which of the Following Statements Would Be Consistent with the Dividend