Multiple Choice
The MM theory with taxes implies that firms should issue maximum debt.In practice, this is not true because:
A) debt is more risky than equity.
B) bankruptcy is a disadvantage to debt.
C) firms will incur large agency costs of short term debt by issuing long term debt.
D) Both A and B.
E) Both B and C.
Correct Answer:
Verified
Correct Answer:
Verified
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