Modigliani and Miller, Recognizing That Dividends Do Somehow Affect Stock

question 86

Multiple Choice

Modigliani and Miller, recognizing that dividends do somehow affect stock prices, suggest that positive effects of dividend increases are attributable

• A) directly to the dividend policy.
• B) directly to the optimal capital structure.
• C) not to the informational content but to the consistency in the payment of dividends.
• D) not to the dividend itself but to the informational content of the dividends with respect to future earnings.

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Definitions:

Joint Probabilities

The probability of two or more events happening at the same time, assuming they are related.

Complement

In probability theory, the complement of an event is the set of all outcomes that are not in the event.

Event A

A specified occurrence or outcome, often used in probability and statistics to denote a specific set of results within an experiment.

Sample Space

The collection of all potential results or outcomes from a probabilistic experiment.