The Modigliani-Miller Proposition I Without Taxes States

question 41

Multiple Choice

The Modigliani-Miller Proposition I without taxes states:

• A) A firm cannot change the total value of its outstanding securities by changing its capital structure proportions.
• B) When new projects are added to the firm the firm value is the sum of the old value plus the new.
• C) Managers can make correct corporate decisions that will satisfy all shareholders if they select projects that maximize value.
• D) the determination of value must consider the timing and risk of the cashflows.

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Definitions:

EMG

Electromyography, a diagnostic procedure to assess the health of muscles and the nerve cells that control them.

EEG

Short for electroencephalogram, a test that measures electrical activity in the brain using small, flat metal discs attached to the scalp.

ECG

An electrocardiogram, a diagnostic tool that measures and records the electrical activity of the heart to detect cardiac abnormalities.

Action Potentials

Rapid changes in the membrane potential that briefly reverse the polarity of a neuron or muscle cell, allowing for signal transmission.