Modgliani and Miller's Mathematical Model Included a Number of Restrictions

question 137

Multiple Choice

Modgliani and Miller's mathematical model included a number of restrictions on the behavior of firms and individuals that made the model not very realistic.   Those restrictions included: ​

• A)The assumption that there are no income taxes. ​
• B)The assumption that securities trade in perfectly efficient capital markets in which there are no transactions costs. ​
• C)The assumption that investors and firms can borrow as much as they want at the same rate. ​
• D)All of the above​
• E)A & B only​
• F)B & C only​

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Definitions:

Unsatisfied Need

A condition or state where an individual's desires or requirements are not met, potentially creating a space for new products or services to fulfill that gap.

Functional Needs

The practical or utilitarian requirements that consumers seek in products or services, which fulfill specific functions or tasks.

Search for Information

The process individuals or entities engage in to find and gather data, facts, or details on a particular subject or for a specific purpose, often conducted prior to making decisions.

Esteem Need

A concept from Maslow's hierarchy of needs that refers to the human desire for respect, self-esteem, and recognition from others.