Discuss whether the assumptions made by Miller and Modiglianis dividend irrelevance theory fail to mirror the real

Question:

Discuss whether the assumptions made by Miller and Modigliani’s dividend irrelevance theory fail to mirror the real world. If you agree that they fail to mirror the real world, does that invalidate the usefulness of their theory?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance Principles And Practice

ISBN: 9781292450940

9th Edition

Authors: Denzil Watson, Antony Head

See More Books

Question Posted: Nov 02, 2023 07:19 AM

See More Questions

Given the assumptions made by Miller and Modiglianis dividend irrelevance theory, do you consider their conclusions to be logical?
Water is the working fluid in an ideal Rankine cycle. The pressure and temperature at the turbine inlet are 11 MPa and 590C, respectively, and the condenser pressure is 6.9 MPa. The mass flow rate of...
Managing quality helps build successful strategies of A. Dfferentiation, low cost and service. B. Differentiation, time and service. C. Differentiation, time and response. D. Differentiation, low...
You are given the following information: The current gold price is $1,650, the net convenience yield for gold is 1.7% per year, the risk-free rate is 5% per year, the volatility is 30% per year, the...
Cal-Lite Products, Inc., manufactures a line of food products that appeals to persons interested in weight loss. To stimulate sales, Cal-Lite includes cash refund coupons in many of its products....
Select the correct answer for each of the following questions. 1. On July 1, 20X3, Barker Company purchased 20 percent of Acme Companys outstanding common stock for $400,000 when the fair value of...
What is the purpose of performance measurement?
Use Solver to create a Sensitivity Report for question 18 at the end of Chapter 3 and answer the following questions: a. Which of the constraints in the problem are binding? b. If the company was...
Which of the following concept shows that the expenses of current accounting period recorded regardless of whether it has been paid? 1 point A.Prudence B.Historical Cost C.Accrual Concept D.Money...
How do you consider the increased ownership of shares by institutional shareholders has affected the dividend policies of UK public limited companies?
Big plc is to take over Little plc and plans to offer its shares in payment for Littles shares. If we assume that Big has to pay 25m (market value) to take over Little, Big must issue 10 million new...
An LTI system has impulse response h[n] = 5 (1/2) n u[n]. Use the Fourier transform to find the output of this system when the input is x[n] = (1/3) n u[n].
Companies that engage international business do so in pursuit of a broad range of goals. Nonetheless, the text identifies key drivers, noting that the typical company expands operations...
How do lifestyle changes, such as urbanization or an aging population, affect consumer needs and preferences in our industry?
Verify that the following general thermodynamic property relationships are valid for the specific case of an ideal gas: (a) T = au (b) P = -9) av
Performance management systems that do not make true contribution to the organizational goals are not true performance management systems. List and describe at least five contributions a good...
How do cognitive biases, such as confirmation bias and anchoring, influence strategic decision-making processes at the executive level, and what measures can be implemented to mitigate their impact ?
Prove that every proper affine plane isometry F[x] = Qx + b of R2, where det Q = 1, is either (a) A translation, or (b) A rotation (7.40) centered at some point c R2.
Sandcastles, Inc.s management has recently been looking at a proposal to purchase a new brick molding machine. With the new machine, the company would not have to buy bricks. The estimated useful...
A taxpayer sells a warehouse for a recognized gain. Depreciation had been properly claimed on the property, based on the straight-line method over a 39-year recovery period. Will the same amount of...
Osprey Corporation, a closely held corporation, has $100,000 of net active income, $25,000 of portfolio income, and a $120,000 loss from a passive activity. a. How much of the passive loss can Osprey...
Marmot Corporation pays a dividend of $100,000 in the current year. Otter Corporation, which is in the 25% marginal bracket, owns 15% of Marmots stock. Gerald, an individual taxpayer in the 25%...
Situations in which audit teams are unable to obtain sufficient appropriate evidence necessary to support their opinion on the entity's financial statements are referred to as scope limitations....
Macho Sports Company sells soccer and baseball merchandise. The company is trying to decide whether or not to continue the baseball merchandise given the decline in the demand and current loss of...
What amount of money invested today will provide end-of-month payments of $400 for 5 years, if the annuity is deferred for 4% years and the money earns 9.0% compounded semi-annually

Discuss whether the assumptions made by Miller and Modiglianis dividend irrelevance theory fail to mirror the real

Question:

Step by Step Answer:

Here the discussion should focus on the fact that Miller and Modiglianis assumpt...View the full answer

Corporate Finance Principles And Practice

Students also viewed these Business questions