I need steps for question 16&17. Suppose a Miller equilibrium exists (did Miller

Question

I need steps for question 16&17.

Suppose a Miller equilibrium exists (did Miller believe that value could be added with the use of debt?) with corporate tax rate of 20% and personal tax rate on income from bonds of 30%. What is the personal tax rate on income from stocks? Given that the corporate tax rate = 40%, personal tax rate on income from bonds = 30%, and personal tax rate on income from stocks = 25%, leverage will add how much value to the unlevered firm per dollar of debt? Which of the following is/are true (ceteris paribus)? Increases in the strike price lead to increases in call value Decreases in underlying volatility lead to increases in put value Decreases in interest rates lead to decreases in put value Increases in stock price to increases in put value none of the above arc true Put-Call Parity requires that the call option be written and put option be held on the same underlying stock

Explanation / Answer

A ,C,D

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