Quiz Ch 14 – T/F Dividend Certainty and the “Bird-in-the-Hand Fallacy” from MM’s Perspective

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition

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True or false: Investors' preference for high-payout firms, driven by the perceived dividend certainty over uncertain capital gains, has been challenged by Miller and Modigliani as the "bird-in-the-hand fallacy." They argue that most dividends are reinvested in stocks, sharing risks with reinvested earnings.

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