According to Modigliani and Miller Dividend Policy Would Be Irrelevant

question 48

Multiple Choice

According to Modigliani and Miller dividend policy would be irrelevant if which of the following was true?
I.Personal and corporate income taxes do not exist
II.Markets are strong-form efficient
III.Transaction costs were negligible

• A)I
• B)III
• C)II an III
• D)I, II, and III

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Definitions:

Aggregate Demand

The comprehensive requirement for products and services in an economic setting, valued at a certain price point during a specific timeframe.

Interest Rates

The cost of borrowing money, expressed as a percentage of the amount borrowed, paid to the lender over a specified period.

Excess Supply

A situation where the quantity of a good or service provided is more than the quantity demanded at a given price.

Interest Rate

The cost, presented as a percentage of the principal amount, incurred by a borrower from a lender for asset use.