In the Context of the M&M Irrelevance Theorem, in the Absence

Multiple Choice

In the context of the M&M Irrelevance theorem, in the absence of taxes and bankruptcy costs, which of the following is true?

A) The total value of the firm is dependent on the firm's capital structure.
B) Investors can undo the leverage that the corporation has undertaken.
C) Adding debt to the capital structure creates value.
D) Shareholders will pay a premium for shares merely because a firm chooses to introduce financial leverage.