Which of the following is true of arguments for dividend relevance? A

Which of the following is true of arguments for dividend relevance?

A) A firm’s value is determined solely by the earning power and risk of its assets.
B) Investors are generally risk averse and attach less risk to current dividends than future dividends or capital gains.
C) The value of a firm is unaffected as it functions in a perfect market.
D) A clientele effect exists which causes a firm’s shareholders to receive the dividends that they expect.

ANSWER

B