Gordon's "bird-in-the-hand" argument suggests that dividends are irrelevant. firms should have a 100 percent payout policy....
Gordon's "bird-in-the-hand" argument suggests that
dividends are irrelevant.
firms should have a 100 percent payout policy.
shareholders are generally risk averse and attach less risk to current dividends.
the market value of the firm is unaffected by dividend policy.
Homework Answers
It is option C
The Gordon's bird in the hand theory says that investors always looks for risk free and do not want to take more risk so they prefer dividends to that of capital gain which arise due to stock price increase.
Option A incorrect as it says dividend irrelevant but it is relevant
Option B incorrect as it did not say firm should have only 100% as payout policy
Option D incorrect as it did not tell anything about how the dividend effects market value of firm
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