In a World with No Taxes,MM Shows That a Firm's

question 51

True/False

In a world with no taxes,MM shows that a firm's capital structure does not affect the firm's value.However,when taxes are considered,MM show a positive relationship between debt and value,i.e.,its value rises as its debt is increased.

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Definitions:

Board of Directors

A group of individuals elected by the shareholders of a company to oversee the management and provide guidance on corporate affairs.

Control

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, often through holding a majority of voting rights.

News-gathering

The process of collecting, reporting, and analyzing news from various sources.

Rationalizing

The process of offering a logical, reasonable explanation or justification for behavior, decisions, or beliefs.