Under the Simplifying Assumptions of Modigliani and Miller,an Increase in a Firm's

question 37

Multiple Choice

Under the simplifying assumptions of Modigliani and Miller,an increase in a firm's financial leverage will:

• A) increase the variability in earnings per share.
• B) reduce the operating risk of the firm.
• C) increase the value of the firm.
• D) decrease the value of the firm.

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Definitions:

Balance

The ability of the body to maintain its center of mass over its base of support, a function involving sensory input, integration by the brain, and output to muscles.

Amplitude

The extent of displacement of a wave or oscillation, a measure of its strength or intensity.

Sensorineural Hearing Loss

A type of hearing loss resulting from damage to the inner ear (cochlea) or the nerve pathways from the inner ear to the brain.

Loudly

With a high volume or intensity of sound.