Modigliani and Miller's First Article Led to the Conclusion That

question 27

True/False

Modigliani and Miller's first article led to the conclusion that capital structure is "irrelevant" because it has no effect on a firm's value.However,that article was criticized because it assumed that no taxes existed.MM then revised their original article to include corporate taxes,and this model led to the conclusion that a firm's value would be maximized if it used (almost)100% debt.

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Definitions:

Syllogism

A form of reasoning in which a conclusion is drawn from two given or assumed propositions (premises); a common logical structure.

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TV programs designed to be suitable and enjoyable for viewers of all ages, often focusing on themes relevant to family life.

Minor Term

The term in a syllogism that is the subject of the conclusion.

Syllogism

a form of deductive reasoning consisting of a major premise, a minor premise, and a conclusion logically drawn from them.