Which one of the following statements is false according to MM's proposition I?
A) Firm value is unaffected by the firm's capital structure.
B) Proposition I is also called the debt-irrelevance proposition.
C) Shareholders should care about the firm's debt policy.
D) After restructuring, the firm's value should be the same as it was prior to restructuring.

Question

Quizplus · Accepted Answer

MM's proposition I states that firm value is unaffected by the firm's capital structure, so shareholders should not care about the firm's debt policy. Therefore, statement C is false. Statements A, B, and D are true according to proposition I.

Which One of the Following Statements Is False According to MM's