What Is the Major Contribution of the Miller Model

question 63

Multiple Choice

What is the major contribution of the Miller model?

• A)It demonstrates that personal taxes decrease the value of using corporate debt.
• B)It demonstrates that financial distress and agency costs reduce the value of using corporate debt.
• C)It demonstrates that equity costs increase with financial leverage.
• D)It demonstrates that debt costs increase with financial leverage.

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Definitions:

Price

The monetary value attached to the purchase of a good or service.

Quantity

The quantity of a tangible or intangible product or service.

Curve Shift

A movement of the supply or demand curve to the left or right, indicating a change in the market conditions.

Movement Along

Changes in the quantity demanded or supplied resulting from a change in price, illustrated by a movement along a demand or supply curve.