MM Proposition I without taxes proposes that:
A)the value of an unlevered firm exceeds that of a levered firm.
B)there is one ideal capital structure for each firm.
C)leverage does not affect the value of the firm.
D)shareholder wealth is directly affected by the capital structure selected.
E)the value of a levered firm exceeds that of an unlevered firm.

Question

Quizplus · Accepted Answer

MM Proposition I without taxes states that the capital structure of a firm does not affect its overall value. Therefore, leverage does not have an impact on the value of the firm.

MM Proposition I Without Taxes Proposes That