In Modigliani and Miller's Perfect World

question 25

Multiple Choice

In Modigliani and Miller's perfect world,

• A)capital structure can only affect the value of a firm if poor control arrangements exist within that structure.
• B)bad capital structures will create arbitrage opportunities and will therefore be immediately eliminated.
• C)managers should decide on how an investment will be financed prior to deciding whether to undertake that investment.
• D)Both A and B are true statements.

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Definitions:

Binge-Eating Disorder

A serious eating disorder characterized by frequent episodes of consuming very large amounts of food but without subsequent purging behaviors, like vomiting.

Bulimia Nervosa

A psychological eating disorder characterized by recurrent binge eating followed by inappropriate compensatory behaviors such as vomiting.

Learned Helplessness

A psychological state resulting from enduring repeated aversive stimuli beyond one's control, leading to a decreased ability to influence future outcomes and a sense of powerlessness.

Social Cognitive Theorists

Scholars who focus on understanding how people learn by watching others and how they control their own behavior through self-regulation and self-reflection.