Question

What is the correct implication for the following dividend theories? MM dividend irrelevance theory suggests a...

  1. What is the correct implication for the following dividend theories?
  1. MM dividend irrelevance theory suggests a higher dividend policy.
  2. Bird-in-the-hand theory assumes that investors do not value dividend, thus suggests a lower dividend policy.
  3. Tax-aversion theory assumes that dividend tax is higher than capital gain tax, thus suggests a lower dividend policy.
  4. Signaling theory suggests that firms should pay lower and unstable dividend.
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C. Tax-aversion theory assumes that dividend tax is higher than capital gain tax, thus suggests a lower dividend policy.

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