[Verse 1] In nineteen fifty-eight two minds were bright Modigliani Miller saw the light They asked a question that would shake the floor Does dividend policy matter anymore In perfect markets where the rules are clean No taxes friction nowhere to be seen They built a theory bold and crystal clear That changed the way we think year after year [Chorus] Dividend irrelevance is the key MM theory sets the value free Cut the pie in different ways you see Same total value guaranteed to be Whether cash or capital gains you choose Firm value stays the same you cannot lose Perfect markets make it plain as day Dividend policy fades away [Verse 2] Imagine perfect information flows Every investor always somehow knows No transaction costs or tax to pay No bankruptcy risk to block the way If company pays dividends today Stock price drops by that exact same way Investors get their cash but lose some shares The total wealth remains the same who cares [Chorus] Dividend irrelevance is the key MM theory sets the value free Cut the pie in different ways you see Same total value guaranteed to be Whether cash or capital gains you choose Firm value stays the same you cannot lose Perfect markets make it plain as day Dividend policy fades away [Bridge] Homemade dividends they call the trick Sell some shares to get your money quick Or reinvest when dividends arrive Keep the value perfectly alive Arbitrage will keep the balance true If prices differ someone profits too Market forces push back into line Making dividend choice benign [Verse 3] But reality is not so clean Perfect markets rarely can be seen Taxes favor gains over dividend flow Transaction costs make trading harder though Information gaps and agency Change the game significantly Still the theory gives us baseline view Of what pure market forces do [Chorus] Dividend irrelevance is the key MM theory sets the value free Cut the pie in different ways you see Same total value guaranteed to be Whether cash or capital gains you choose Firm value stays the same you cannot lose Perfect markets make it plain as day Dividend policy fades away [Outro] MM showed us how to think it through In perfect worlds what would be true Though real markets have their flaws They gave us fundamental laws Dividend irrelevance remains The starting point that still explains How firm value really works today When market friction fades away
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