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CFA Level 1 Exam

3959 Questions

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Question No. 1

Which of the following is/are true about dividend policies?
I. Under the Bird-in-the-Hand theory, stocks with lower pay-out ratios have higher required rates of return.
II. Under the Tax Preference theory, stocks with lower pay-out ratios have lower required rates of return.
III. Under the Modigliani-Miller theory, the price of a stock does not change with a change in the dividend policy.

Choose the correct option from the given list.
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