Under the MM Theorem,capital Structure Will Not Change the Total

question 44

Multiple Choice

Under the MM theorem,capital structure will not change the total value of a firm because:

• A)EPS is not affected by leverage.
• B)two firms with the same assets but different capital structures are not considered perfect substitutes.
• C)dividend policy is irrelevant.
• D)perfect substitutes should not sell at different prices in the same market.

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Definitions:

Absolutism

A deontological theory (also called nonconsequentialism) that emphasizes duties or rules; what’s morally right applies to everyone.

Teleological Ethics

Ethics that are value based.

Objective Rules

Standards or principles that are based on facts and are impartial, ensuring equal treatment and fairness.

Normative Ethics

A branch of ethics concerned with establishing how things should or ought to be, focusing on the criteria of what is morally right and wrong.