Which One of These Proposes That the Value of a Levered

question 19

Multiple Choice

Which one of these proposes that the value of a levered firm exceeds the value of an unlevered firm by the present value of the tax shield?

• A)MM Proposition I,with and without taxes
• B)MM Proposition I,with tax
• C)MM Proposition II,with tax
• D)MM Proposition I,without tax
• E)MM Proposition II,without tax

---

Definitions:

Private Corporation

A corporation owned by a small group of people and its shares are not traded publicly but are held privately.

Public Markets

Public markets are venues where securities, commodities, and other financial instruments are traded between investors openly and regulated by financial authorities.

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Issued Shares

The total number of shares that a corporation has legally sold to shareholders, including those held by the corporation itself as treasury shares.