The MM Theory with Taxes Implies That Firms Should Issue

question 51

Multiple Choice

The MM theory with taxes implies that firms should issue maximum debt. In practice, this is not true because:
I.debt is more risky than equity;
II.bankruptcy and its attendant costs are a disadvantage to debt;
III.the payment of personal taxes may offset the tax benefit of debt

• A)I only
• B)II only
• C)III only
• D)II and III only

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Definitions:

Raw Data

Unprocessed and unanalyzed data collected directly from a source, without any manipulation or treatment.

Regular Time Intervals

Fixed or consistent periods between events, measurements, or observations, facilitating comparison or synchronization.

Trend Projection Equation

A mathematical formula used to forecast future values based on historic data trends, often applied in time series analysis.

Slope

A measure of the steepness, incline, or grade of a straight line, calculated as the ratio of the vertical change to the horizontal change between two points on the line.