The Modigliani and Miller Hypothesis Suggests That Capital Structure Doesn't

question 58

Multiple Choice

The Modigliani and Miller hypothesis suggests that capital structure doesn't matter.All of the following conditions need to be met for this hypothesis to be true EXCEPT

• A) corporate income is not subject to taxation.
• B) capital structure consists only of stocks and bonds.
• C) securities are traded in perfect or efficient markets.
• D) all corporate net income is paid out as dividends.

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