The dividend preference theory is a relevant and rationally arguable position because:

Question

Quizplus · Accepted Answer

All of the above options provide rational arguments for why shareholders may have a preference for receiving dividends today versus waiting for potential future growth. The saying "a bird in hand is worth two in the bush" speaks to the certainty of something received today versus the potential of receiving something more in the future. Shareholders may also be skeptical of management's ability to successfully invest retained earnings to generate future growth, leading to a preference for receiving dividends today. Therefore, all three options are relevant and support the dividend preference theory.

The Dividend Preference Theory Is a Relevant and Rationally Arguable