The Essence of Modigliani and Miller's Irrelevance Theory Is That

question 29

Multiple Choice

The essence of Modigliani and Miller's irrelevance theory is that

• A) increasing operating leverage will maximize EPS.
• B) shareholders prefer to invest in firms with a high degree of financial leverage.
• C) altering a firm's capital structure will increase its value.
• D) utilizing more debt will increase a firm's value.
• E) the value of the firm will not be changed by how assets are distributed between bondholders and stockholders.

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Definitions:

Value Diversity

Appreciating and respecting the variety of differences in individuals, including culture, race, religion, gender, and sexual orientation.

Values, Attitudes, Behaviors

Core beliefs or principles that influence how individuals perceive the world and drive their actions and reactions.

Mistrusting Attitude

A disposition of doubtfulness or skepticism towards the intentions or integrity of others.

Observe Behavior

The act of carefully watching and analyzing actions and reactions in a systematic manner.