MM's Dividend Irrelevance Theory Says That While Dividend Policy Does

question 44

True/False

MM's dividend irrelevance theory says that while dividend policy does not affect a firm's value, it can affect the cost of capital.

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Definitions:

Risk Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by government bond yields.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, widely used in finance to gauge the volatility of an investment.

Probability Distribution

A statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

Variances of Stocks

Measures of the dispersion of returns for a given stock, used to assess the risk associated with holding the stock.