Which of the following is not a Modigliani and Miller assumption regarding dividend irrelevance?
A)There are no costs of trading shares.
B)Investors can borrow at the same rate as the company.
C)There are personal and corporate taxes.
D)All market participants (e.g.management and shareholders)have the same information.

Question

Quizplus · Accepted Answer

Personal and corporate taxes are actually a key assumption in Modigliani and Miller's theory of dividend irrelevance. The other three assumptions (no costs of trading shares, investors can borrow at the same rate as the company, and all market participants have the same information) are all part of the model.

Which of the Following Is Not a Modigliani and Miller