A Key Limitation of Miller and Modigliani's Theory of Dividend

question 21

Short Answer

A key limitation of Miller and Modigliani's theory of dividend irrelevance is that they assume there is a perfect capital market with no ___________.

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Definitions:

Opportunity Cost

The financial setback of forgoing the next highly regarded alternative when determining a course of action.

Technological Advance

Improvements and innovations in technology that increase productivity, efficiency, and economic output.

Machine-making Industry

A sector of the economy focused on the manufacturing and maintenance of machines and mechanical equipment.

Production Possibilities Frontier

A portrayal that shows the maximum achievable production levels for two goods, based on a selection of inputs involving resources and extra factors.