Despite some theoretical assertions, many investors do care a great deal about dividends. They believe that sure dividends today (a bird in the hand) are less risky than a return in the form of capital gains in the future. The following table lists some factors that might affect an investor's preference for dividends. Indicate whether the given factors are likely to make an investor prefer to receive more or fewer dividends Investors Will Likely Prefer More Dividends Fewer Dividends Factor When investors receive dividends today, they may choose to reinvest or to consume goods. When an investor dies, his or her heirs are not liable for taxes on the capital gains generated during the investor's life. They are only liable for the capital gains earned since the investor's death. Risk-averse investors prefer to minimize uncertainty with their expectations of income from their investment. Erin and Mia are finance researchers and are discussing the Modigliani and Miller (MM) dividend irrelevance theory. Based on your understanding of MM's argument and the impact of the assumptions applied to the argument, fill in the missing parts of their conversation. Modigliani and Miller (MM) dividend irrelevance theory is based on several assumptions. However, in the real world, these assumptions don't apply. Erin Mia True. If the transaction cost assumption is removed, then investors do care about how they receive their gains from their investment-capital gains or dividends Erin You are right, Mia. According to MM's theory, investors who own low- or nondividend-paying stocks could their holdings to satisfy current income requirements Mia But in the real worild, Erin, this is not a fair assumption. Transaction costs with each trade activity will the investor's earnings leading investors toward preferring regular dividends. Save & C