Under the Idealized Conditions of MM, Which Statement Is Correct

question 61

Multiple Choice

Under the idealized conditions of MM, which statement is correct when a firm issues new stock in order to pay a cash dividend on existing shares?

• A)the new shares are worth less than the old shares.
• B)the old shares drop in value to equal the new price.
• C)the value of the firm is reduced by the amount of the dividend.
• D)the value of the firm is unaffected.