Modigliani and Miller Disagreed with the Proposal by Gordon and Lintner

question 65

Multiple Choice

Modigliani and Miller disagreed with the proposal by Gordon and Lintner regarding dividends. Why?

• A) M&M claimed that many, if not most, investors will spend their dividends on consumer goods.
• B) M&M claimed that many, if not most, investors will reinvest their dividends in the same or similar manner that the firms would.
• C) M&M claimed that many, if not most, investors would prefer capital gains.
• D) M&M claimed that firms only attract investors who would prefer dividends.

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Definitions:

Labor Relations

Labor relations is the field and practice concerning the management of relationships between employers and employees, including collective bargaining, labor rights, and dispute resolution.

Efficiency

The effectiveness with which resources are used to achieve goals and objectives, often evaluated in terms of output per unit of input.

Equity

The concept of fairness and justice in the distribution of wealth, opportunities, and privileges within a society.

Voice

The ability or opportunity for individuals or groups to express opinions and influence decisions that affect them.