M and M Proposition I States That

question 143

Multiple Choice

M and M Proposition I states that

• A) the value of a firm's assets and operations does not change with changes in the firm's capital structure.
• B) the value of the firm is maximized when the WACC after-tax is minimized.
• C) the cost of equity is a positive linear function of its capital structure.
• D) the only risk relevant in measuring the cost of equity is business risk.

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The portion of income or a financial distribution that is not subject to taxation by authorities.

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An individual retirement account allowing post-tax contributions with the benefit of tax-free withdrawals under certain conditions.

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