General Studies · Dividend Policy
According to the Modigliani-Miller (MM) dividend irrelevance theory (without taxes), dividend policy:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Reduces the cost of equity if retained earnings are lower
- 2Increases shareholder wealth when the payout ratio is high
- 3Is irrelevant under perfect capital market assumptions✓
- 4Directly determines the market value of the firm
Correct answer
Is irrelevant under perfect capital market assumptions
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