Debt, Dividend Policy, Taxes, Inflation and Market Valuation



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    • Massachusetts Institute of Technology. The material for this paper is based upon work supported in part by the National Science Foundation under Grant SES 7926733. The author wishes to express his appreciation to Terry Marsh, Lucas Papademos, Julio Rotemberg and Robert Shiller for reading an earlier draft of the manuscript and making valuable suggestions. I have also benefited from the advice of Fischer Black, Robert Merton and Stewart Myers.