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
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.