Which of the Following Statements Is Not True Regarding Miller's

question 1

Multiple Choice

Which of the following statements is not true regarding Miller's analysis?

• A)There is an optimal debt/equity ratio for the corporate sector.
• B)There is no optimal debt/equity ratio for individual companies.
• C)Shareholders benefit from the tax saving of interest on debt.
• D)Securities issued by different companies will appeal to different clientele.

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Definitions:

Direct Financing Lease

A type of lease where the lessor effectively transfers all the risks and rewards incidental to ownership to the lessee without transferring legal ownership.

Sales-Type Lease

A lease agreement where the lessor recognizes immediate profit similar to a sale, often used in the context of finance leases in accounting.

Unearned Interest: Leases

Interest that has been collected on a lease but not yet earned, often because the period it covers has not fully elapsed.

Present Value Factors

Numeric factors used in calculating the present value of future cash flows, reflecting the time value of money.