Empirical testing has confirmed the validity of which of the following attitudes concerning dividends?
A) Dividend irrelevance,or Modigliani-Miller,theory.
B) Investors prefer dividends to capital gains because dividends are more certain.
C) Investors prefer capital gains to dividends because capital gains are taxed at more favorable rates.
D) Empirical testing has produced some evidence in support of each of the theories above.
E) Empirical testing has not produced any definitive results.

Question

Quizplus · Accepted Answer

Empirical testing has generated some evidence in support of both the dividend irrelevance theory (Modigliani-Miller theory) and the preference for dividends theory, as well as the preference for capital gains theory. Therefore, the correct choice is D.

Empirical Testing Has Confirmed the Validity of Which of the Following