Modigliani and Miller (MM),in Their Second Article,took Account of Taxes,bankruptcy,and

question 21

True/False

Modigliani and Miller (MM),in their second article,took account of taxes,bankruptcy,and other factors that were assumed away in their original article.Once they took account of all these assumptions,they concluded that every firm has a unique optimal capital structure.Moreover,a manager can use the second MM model to determine his or her firm's optimal debt ratio.

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Definitions:

Visible Finished Product

A tangible outcome that can be seen and evaluated by others, often as the end result of a project or manufacturing process.

Auto Industry

Refers to the global sector of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles.

Job Sharing

Splitting one job between two people.

Full-Time Job

Employment in which the employee works a minimum number of hours defined as full-time by their employer, typically 40 hours per week.