Empirical Testing Has Confirmed the Validity of Which of the Following

question 107

Multiple Choice

Empirical testing has confirmed the validity of which of the following attitudes concerning dividends?

• A) Dividend irrelevance,or Modigliani-Miller,theory.
• B) Investors prefer dividends to capital gains because dividends are more certain.
• C) Investors prefer capital gains to dividends because capital gains are taxed at more favorable rates.
• D) Empirical testing has produced some evidence in support of each of the theories above.
• E) Empirical testing has not produced any definitive results.

---

Definitions:

Involuntary Bankruptcy

A legal proceeding initiated by creditors against a debtor who fails to pay owed amounts, forcing the debtor into bankruptcy to satisfy debts.

Creditors

Individuals or organizations to whom money is owed by debtors.

Petition

A formally drafted plea, often endorsed by numerous individuals, urging those in power to consider a specific issue.

Bankrupt Estate

The total assets of a person or entity that are available for distribution among creditors after declaring bankruptcy.