Imagine that Classic Cookware has been earning $$2\mathrm{.}00$ and paying a $50\%$ payout for a dividend of $$1\mathrm{.}00.$ When Classic announces that it is increasing the dividend to $$1\mathrm{.}50,$ the stock price then jumps from $$20\mathrm{.}00$ to $$30\mathrm{.}00.$ Some people would argue that this is proof that investors prefer dividends to retained earnings. Miller and Modigliani would agree with this argument.

True

False