Modigliani and Miller, recognizing that dividends do somehow affect stock prices, suggest that positive effects of dividend increases are attributable :

CS Executive · Financial and Strategic Management · PYQS · June 2021
Modigliani and Miller, recognizing that dividends do somehow affect stock prices, suggest that positive effects of dividend increases are attributable :
(A) Directly to the dividend policy
(B) Directly to the optimal capital structure
(C) Not to the informational content but to the consistency in the payment of dividends
(D) Not to the dividend itself but to the informational content of the dividends with respect to future earnings

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Dividend Policy

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