Question
1. Dividends are relevant and dividend policy irrelevant when: A. cash dividends are always constant and dividend policy is changed as management needs. B. cash
1. Dividends are relevant and dividend policy irrelevant when:
A. cash dividends are always constant and dividend policy is changed as management needs.
B. cash dividends are increased for one year while others are held constant, thus causing an increase in stock price, and dividend policy establishes the trade-off between dividends at different dates.
C. cash dividends are always constant and dividend policy establishes the trade-off between dividends at different dates.
D. cash dividends are increased for one payment while others are held constant and dividend policy is changed as management needs. E. None of these.
2. Homemade dividends are described by Modigliani and Miller to be the:
A. dividend one pays oneself to avoid risky stocks.
B. re-arrangement of the firm's dividend stream as management needs.
C. re-arrangement of the firm's dividend stream by investors buying or selling their holdings in the stock.
D. present value of all dividends to be paid.
E. None of these.
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