Multiple Choice
Which of the following is true of the assumptions outlined by the capital structure theory published by Professors Franco Modigliani and Merton Miller (MM) ?
A) Personal income taxes are deductible.
B) Brokerage costs do not exist.
C) The value of the firm will be maximized by financing completely through equity.
D) A high debt/assets ratio decreases the value of the firm.
E) Bankruptcy costs are high when the firm uses no debt.
Correct Answer:
Verified
Correct Answer:
Verified
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