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:

General Ledger

A comprehensive accounting record of all financial transactions of a company, organized by account.