The Advantages of Treasury Bonds Include

question 68

Multiple Choice

The advantages of Treasury bonds include

• A) there is no default.
• B) they can't be called in.
• C) most interest is free of state and local taxes.
• D) All of the above
• E) Only A and C

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Definitions:

M&M Proposition

The Modigliani-Miller Proposition argues that in an ideal market, the value of a firm is unaffected by how it is financed, whether through debt or equity.

Capital Structure Weights

The proportions of a company's financing derived from different sources, such as debt and equity, used in calculating the cost of capital.

Levered Firm

A company that uses debt in addition to equity in its capital structure, often to finance operations and grow.

Unlevered Firm

A business that operates without any debt financing, using only equity for its operations and investments.