With respect to the proposition that dividend policy does not matter,in order to raise an additional $5,600 in cash by issuing stock,the stock sold must be worth:
A) more than $5,600.
B) $2,800.
C) $5,600.
D) less than $5,600.

Question

Quizplus · Accepted Answer

According to the dividend irrelevance theory, the value of a firm is determined by its investment policy, not its dividend policy. Therefore, to raise $5,600 in cash, the stock sold must be worth exactly $5,600.

With Respect to the Proposition That Dividend Policy Does Not