Which Statement Correctly Describes Proposition I of Modigliani and Miller

question 44

Multiple Choice

Which statement correctly describes proposition I of Modigliani and Miller?

• A) The value of the firm is independent of its capital structure.
• B) If there is no default risk, firms should exclusively use debt to finance projects.
• C) If there is no default risk, firms should exclusively use equity to finance projects.
• D) The value of the firm's tax shields depends solely on the amount of debt issued.

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Definitions:

Marketing Strategy

The overall plan a business uses to reach potential consumers and turn them into customers of their product or service.

Social Media

Platforms and websites that enable users to create and share content or participate in social networking, such as Facebook, Twitter, and Instagram.

Customer Experiences

The perceptions and reactions of customers resulting from the use or anticipated use of a company's products or services.

Products

Goods, services, or ideas that can be offered to a market to satisfy a want or need.