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:

Effective Teamwork

The collaborative effort of a group to achieve a common goal or task efficiently and creatively.

Organizational Behaviour

The study of human behavior in organizational settings, the interface between human behavior and the organization, and the organization itself.

Adapt to Change

The ability to adjust and modify oneself or one's processes in response to alterations in the surrounding environment or conditions.

Human Resources Management

Programs, practices, and systems to acquire, develop, motivate, and retain employees in organizations.