The correct answer is: A. Dividend and Bonus.
The MM Model of Dividend Irrelevance is a theory that states that the value of a company is not affected by its dividend policy. This means that whether a company pays out dividends or not, its stock price will not change.
The MM Model is based on the idea that investors can create their own dividends by selling shares of stock. If a company pays out a dividend, investors can sell some of their shares and receive the cash. If a company does not pay out a dividend, investors can hold onto their shares and receive capital gains when the stock price goes up.
The MM Model has been criticized by some academics, who argue that it does not take into account the fact that some investors prefer dividends to capital gains. However, the MM Model is still widely used by financial analysts and investors.
Here is a brief explanation of each option:
- Option A: Dividend and Bonus. This is the correct answer. The MM Model of Dividend Irrelevance is based on the idea that investors can create their own dividends by selling shares of stock. If a company pays out a dividend, investors can sell some of their shares and receive the cash. If a company does not pay out a dividend, investors can hold onto their shares and receive capital gains when the stock price goes up.
- Option B: Dividend and Capital Issue. This is not the correct answer. The MM Model of Dividend Irrelevance does not take into account the possibility of a company issuing new shares of stock.
- Option C: Profit and Investment. This is not the correct answer. The MM Model of Dividend Irrelevance does not take into account the company’s profits or investments.
- Option D: None of the above. This is not the correct answer. The correct answer is Option A.