The basic premise of the MM-approach is based on which of the following assumptions A. Asymmetrical information B. Efficient capital markets C. Investor rationality D. Diverse business risk profile E. 100% dividend payout ratio Choose the correct answer from the options given below:?

A, B and C only
C, D, and E only
A, C and E only
B, C and E only

LohaHridoy

4 views

2025-01-04 04:42

1 Answers

AhmedNazir

Option 4 : B, C and E only

The correct answer is B, C and E only.

MM-approach:

The Miller and Modigliani Hypothesis, often known as the MM Approach, contends that the investment policy, not the dividend policy, determines how much a company's shares are worth.

Assumptions of MM approach of Dividend Policy

Perfect Capital Market
Investors are rational.
There is no transaction cost.
Securities are infinitely divisible.
No investor is large enough to influence market price of securities.
There are no floatation costs.
100 % dividend payout ratio.

4 views Answered 2022-09-04 04:29

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