Question

A strong argument can be made that Blank______.

Multiple choice question.

dividends should be paid to bondholders


dividend policy does not matter


stock dividends are better than cash dividends


dividends should never be paid to shareholders

Answer 1

A strong argument can be made that **dividend policy does not matter**.

This perspective is often associated with the Modigliani-Miller theorem, which posits that in perfect markets, the value of a firm is unaffected by how it distributes dividends, as investors can create their own cash flows by selling shares if they desire liquidity.