If Modigliani and Miller’s dividend irrelevancy theory is correct, what is the impact on a firm’s cost of capital and share price if its dividend payout increases?
Cost of Capital Share Price
A) An increase A decrease
B) None None
C) None A decrease
Your answer: C was incorrect. The correct answer was B) None None
How come ? if dividend holders are getting higher dividends how come this is not compensated by a lower share price? |