MM Proposition I without taxes is used to illustrate:
A)the value of an unlevered firm equals that of a levered firm.
B)that one capital structure is as good as another.
C)leverage does not affect the value of the firm.
D)capital structure changes have no effect stockholder's welfare.
E)All of the above.

Question

Quizplus · Accepted Answer

MM Proposition I without taxes states that in a perfect market, the value of a firm is unaffected by its capital structure, implying that leverage does not affect the firm's value, and thus all the options are correct.

MM Proposition I Without Taxes Is Used to Illustrate