Which of the following relates to the Irrelevance Concept of Dividend Theory?
The M M Approach is the Modigliani–Miller dividend irrelevance theory. Under its perfect-market assumptions and with the investment policy fixed, firm value is independent…
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Which of the following relates to the Irrelevance Concept of Dividend Theory?
Answer and explanation
Correct answer D
The M M Approach is the Modigliani–Miller dividend irrelevance theory. Under its perfect-market assumptions and with the investment policy fixed, firm value is independent of whether earnings are paid out or retained. The Walter and Gordon models allow dividend policy to affect value, while the Baumol approach is used in cash management.
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West Bengal SET (WB SET)