The dividend irrelevance hypothesis is based on all of the following assumptions EXCEPT
A) investment decisions will not be altered by the amount of dividend payments.
B) investors do not need cash dividends to supplement their current income.
C) perfect capital markets.
D) borrowing decisions will not be altered by the amount of dividend payments.

Question

Quizplus · Accepted Answer

The dividend irrelevance hypothesis assumes perfect capital markets where investment and borrowing decisions are not affected by the amount of dividend payments. However, it does not assume that investors do not need cash dividends to supplement their current income. In fact, some investors may specifically invest in dividend-paying stocks for this reason.

The Dividend Irrelevance Hypothesis Is Based on All of the Following