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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 |
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Learning Outcome Statements
describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
explain how agency costs may affect a company's payout policy;
CFA® 2025 Level II Curriculum, Volume 3, Module 16.