The Modigliani-Miller Proposition I Without Taxes States

question 58

Multiple Choice

The Modigliani-Miller Proposition I without taxes states:

• A)a firm cannot change the total value of its outstanding securities by changing its capital structure proportions.
• B)when new projects are added to the firm the firm value is the sum of the old value plus the new.
• C)managers can make correct corporate decisions that will satisfy all shareholders if they select projects that maximize value.
• D)the determination of value must consider the timing and risk of the cash flows.
• E)None of the above.

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Definitions:

Culture of Ownership

An organizational environment where employees feel psychologically part of the company, fostering responsibility, engagement, and innovation.

Employee Stock Ownership Plans

An employee benefit plan giving workers ownership interest in the company, often as a form of retirement plan.

Team Behaviours

The actions or reactions of a group working together towards a common goal.

Spot Bonus

A one-time payment given to an employee for exceptional performance, as a reward and motivation, usually without prior announcement or expectation.