Question
According to M&M Proposition I, a firm's capital structure choices Blank______.
Multiple choice question.
do not affect the value of the firm
result in less ambiguity
change the value of the firm
can only be considered in light of their affect on firm value
Multiple choice question.
do not affect the value of the firm
result in less ambiguity
change the value of the firm
can only be considered in light of their affect on firm value
Answers
GPT-4o mini
According to M&M Proposition I, a firm's capital structure choices **do not affect the value of the firm**. This proposition asserts that under certain conditions (like no taxes, no bankruptcy costs, and efficient markets), the value of a firm is determined by its real assets and not by how those assets are financed.