A Major Contribution of the Miller Model Is That It

question 13

Multiple Choice

A major contribution of the Miller model is that it demonstrates,other things held constant,that

• A) personal taxes increase the value of using corporate debt.
• B) personal taxes lower the value of using corporate debt.
• C) personal taxes have no effect on the value of using corporate debt.
• D) financial distress and agency costs reduce the value of using corporate debt.
• E) debt costs increase with financial leverage.

---

Definitions:

Psychoanalytic Model

A psychological framework which posits that human behavior is driven by unconscious desires, wishes, and conflicts, developed by Sigmund Freud.

Phobia

An intense, irrational fear of specific objects, situations, or activities that leads to avoidance behavior.

Punished

A consequence that decreases the likelihood of a behavior occurring in the future.

Internal Conflict

Psychological struggle within the mind of a literary or dramatic character, the resolution of which creates the plot's suspense.