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:

Comparison With Other Cultures

The practice of examining similarities and differences among various cultural practices, values, and norms to understand human behavior and society.

Self-serving Bias

The tendency to attribute positive events to one's own character but attribute negative events to external factors.

Teachers

Professionals who help students acquire knowledge, competence, or virtue in educational settings.

Teaching Ability

The capacity or skill of an individual to impart knowledge or skill to others effectively.