The Modigliani-Miller Theorem States That,in the Absence of Transaction Costs

question 16

Multiple Choice

The Modigliani-Miller Theorem states that,in the absence of transaction costs:

• A)if the capital structure decision has no effect on the total cash flows that a firm can distribute to its debt and equity holders,the levered cash flows will be lower than the unlevered cash flows.
• B)if the capital structure decision has no effect on the total cash flows that a firm can distribute to its debt and equity holders,the unlevered cash flows will be lower than the levered cash flows.
• C)if the capital structure decision has no effect on the total cash flows that a firm can distribute to its debt and equity holders,the decision will only affect the firm's equity.
• D)if the capital structure decision has no effect on the total cash flows that a firm can distribute to its debt and equity holders,the decision also will have no effect on the total value of the firm's debt and equity.

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Definitions:

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The dynamic and emotional bond between parents and their children, influencing their development and well-being.

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Women who have children but have never been married, highlighting a specific family structure.

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Very young children or babies, typically under one year of age, who are in the earliest stage of human life.

Economic

Relating to the production, consumption, and transfer of wealth within a society.