The Modigliani-Miller Proposition I without taxes states: A. a firm cannot chang
ID: 2383147 • Letter: T
Question
The Modigliani-Miller Proposition I without taxes states:
A. a firm cannot change the total value of its outstanding securities by changing its capital structure proportions.
B. when new projects are added to the firm the firm value is the sum of the old value plus the new.
C. None of these.
D. managers can make correct corporate decisions that will satisfy all shareholders if they select projects that maximize value.
E. the determination of value must consider the timing and risk of the cash flows.
Explanation / Answer
A. a firm cannot change the total value of its outstanding securities by changing its capital structure proportions.