The indifference policy advocates that dividends are irrelevant. firms are indifferent to dividend policy but stockholders are not. stockholders are indifferent to dividend policy only as long as dividends are held constant. dividend policy is irrelevant as long as the firm's investment policy is modified for dividend changes. dividend policy is irrelevant.

Question

Nathaniel Hogan

Business

30 April, 08:14

The indifference policy advocates that dividends are irrelevant. firms are indifferent to dividend policy but stockholders are not. stockholders are indifferent to dividend policy only as long as dividends are held constant. dividend policy is irrelevant as long as the firm's investment policy is modified for dividend changes. dividend policy is irrelevant.

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Luca Mejia · Answer 1

The indifference policy advocates that dividends are irrelevant.

Explanation:

The indifference Policy holds that that dividends do not add value to a company's stock price.

According to this theory, investors do not need to concern themselves with a company's dividend policy since they have the option to sell a portion of their portfolio of equities if they want cash.

This school of thought believes that a company's declaration and payment of dividends should have little to no impact on the stock price.