3. Which of the following statements are true regarding Modigliani and Millers approach to dividend

policy?

I.

In a world without taxes and transactions costs and perfect capital markets, the dividend

policy of a firm is irrelevant.

II.

In a world with taxes, transactions costs and perfect capital markets, the dividend policy of a

firm is irrelevant.

III.

With brokerage fees, dividend policy will increase the value of the firm paying dividends.

A)

I only

B)

II only

C)

I and III

D) II and III

E) I, II, and II