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Basic Question 4 of 10
Miller and Modigliani argue that in a world with perfect markets and no taxes
B. management provides a valuable service to investors in allocating earnings between dividends and reinvestment in the firm.
C. investors wishing to receive higher current income than provided by the firm can do so by decreasing their holdings in the firms' shares.
A. investors will prefer firms having dividend payout policies inline with their income requirements.
B. management provides a valuable service to investors in allocating earnings between dividends and reinvestment in the firm.
C. investors wishing to receive higher current income than provided by the firm can do so by decreasing their holdings in the firms' shares.
User Contributed Comments 2
| User | Comment |
|---|---|
| kalps | I.e. dividends are 'IRRELEVANT' capital gains are used to realise gains |
| ceekay | higher 'current' income - current being the operative word |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action;
CFA® 2025 Level II Curriculum, Volume 3, Module 16.