Modigliani and Miller Followed Up Their Initial Work with a New

question 84

Multiple Choice

Modigliani and Miller followed up their initial work with a new model that incorporated a world with corporate taxes.Which of the statements below results from this model?

• A)A new Proposition I with taxes and it states: All debt financing is optimal.
• B)A new Proposition II with taxes and it states: The WACC of the firm falls as more debt is added.
• C)The more debt sold,the greater the tax shield and the smaller the government's share of the firm.
• D)All of these

---

Definitions:

Peggy McIntosh

An American feminist and anti-racism activist known for her work on white privilege, particularly her influential paper "White Privilege: Unpacking the Invisible Knapsack."

White Privilege

Refers to societal privileges that benefit white people over non-white people in certain societies, particularly if they are otherwise under the same social, political, or economic circumstances.

Neoconservative

A political movement characterized by the advocacy of strong national defense, free-market capitalism, and an interventionist foreign policy.

Liberal Arguments

Reasoning and discourses rooted in liberal philosophy, advocating for individual freedoms, equality, and justice.