Dividend Policy a. State Miller and Modiglianis proposition on dividend policy. b. Explain why their proposition makes sense in a world with no taxes and well-functioning capital markets. c. If dividends are taxed, how would your answer to b) change? d. Some researchers have found that the share price of firms decline when they announce that they will stop paying a dividend. What might explain this? e. Taking all factors into account what is a reasonable middle of the road view of dividend policy