The MM Theory with Taxes Implies That Firms Should Issue

question 23

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 is 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:

Cell-Mediated Immune Response

Immune response in which cytotoxic T cells and NK cells detect and destroy infected or cancerous body cells.

Cytokine Signaling

A complex system of intercellular communication that regulates immunity, inflammation, and hematopoiesis through the action and interaction of cytokines.

Antigen Binding Sites

Specific regions on antibodies that recognize and bind to foreign molecules, called antigens, to neutralize them or mark them for destruction.

White Blood Cells

Cells in the blood that are part of the immune system, helping to fight infections.