An Important Implication of Fisher's Separation Theorem Is That

question 25

Multiple Choice

An important implication of Fisher's separation theorem is that:

• A)while the level of investment will depend on management decisions (independent of shareholders' wishes),shareholders will have a preference for given levels of dividend.
• B)shareholders and firm management will have separate interests and directions in decisions on investment,financing and especially dividends,and these have come to be known as an agency problem.
• C)the extent to which a firm should invest can be determined by a simple rule.
• D)the extent of investment undertaken will determine the amount of finance to be raised,and whether that finance will be debt or equity.

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