Modigliani and Miller argue that when a firm has no acceptable investment opportunities, it should ________.
A) preserve the funds and not declare dividends
B) distribute the surplus funds to the owners
C) lower its cost of capital
D) retain the funds until an acceptable project arises

Question

Quizplus · Accepted Answer

Modigliani and Miller's dividend irrelevance theory suggests that a firm's dividend policy is irrelevant to its value and that when there are no acceptable investment opportunities, surplus funds should be distributed to the owners.

Modigliani and Miller Argue That When a Firm Has No