Which of the Following Is NOT One of Modigliani and Miller's

question 46

Multiple Choice

Which of the following is NOT one of Modigliani and Miller's set of conditions referred to as perfect capital markets?

• A) All investors hold the efficient portfolio of assets.
• B) There are no taxes, transaction costs, or issuance costs associated with security trading.
• C) A firm's financing decisions neither change the cash flows generated by its investments, nor do they reveal new information about them.
• D) Investors and firms can trade the same set of securities at competitive market prices equal to the present value (PV) of their future cash flows.

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Definitions:

Reciprocal Determinism

A concept in psychology proposed by Albert Bandura, suggesting that a person's behavior is influenced by personal factors, the environment, and the behavior itself, all of which interact with each other.

Id

In psychoanalytic theory, the part of the personality that contains our primal impulses, desires, and needs.

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, the superego, and reality.

Libido

A term used in psychoanalytic theory to denote the energy of the sexual drive as a component of the life instinct.