Which One of These Events Might Cause the Biggest Challenge

question 70

Multiple Choice

Which one of these events might cause the biggest challenge to the MM propositions?

• A)An increase in the corporate tax rates
• B)A decrease in the cost of debt
• C)An increase in a firm's unlevered WACC
• D)A new law requiring equal lending rates for all borrowers
• E)A change in tax laws to treat interest and dividends equally

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Definitions:

Counterclaim

A statement of claim by the defendant alleging that the plaintiff is responsible for the losses suffered and claiming back against the plaintiff for those losses.

Civil Law Suit

A legal action initiated by one party against another for the enforcement or protection of a private right or for compensation for a wrong in areas governed by civil law.

Counterclaim

A claim made to offset another claim in a legal action, essentially a defendant’s claim against the plaintiff.

Examination for Discovery

A pre-trial process where parties in a lawsuit have the opportunity to question each other or witnesses under oath.