A key assumption of MM's Proposition I without taxes is:
A)that financial leverage increases risk.
B)that individuals can borrow on their own account at rates less than the firm.
C)that individuals must be able to borrow on their own account at rates equal to the firm.
D)managers are acting to maximize the value of the firm.
E)All of the above.

Question

Quizplus · Accepted Answer

MM's Proposition I without taxes assumes that individuals can borrow at the same rates as firms, making capital structure irrelevant to the firm's value.

A Key Assumption of MM's Proposition I Without Taxes Is