The Modigilian-Miller (M&M) Theorem States That

question 61

Multiple Choice

The Modigilian-Miller (M&M) theorem states that:

• A) in an efficient market without taxes and bankruptcy costs, the value of a firm depends upon the firm's capital structure.
• B) in an efficient market without taxes and bankruptcy costs, the value of a firm does not depend upon the firm's capital structure.
• C) in an efficient market without taxes and bankruptcy costs, the value of a firm does not depend upon the firm's cost of capital.
• D) none of the options.

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Definitions:

Common Law

A legal system based on custom, court rulings, and past legal precedents rather than on written laws passed by a legislative body.

Proximate Cause

A legal principle that determines the primary cause or factor that led to an injury or damage, used to establish liability.

Legal Cause

A legally sufficient reason or basis for an action, behavior, or event, as recognized by law.

Cause In Fact

The actual cause or reason an event occurred, which can be determined by the "but-for" test in legal cases.