The Modigliani and Miller Capital Structure Theorem suggests that the cost of equity decreases as financial leverage increases.

Name: The Modigliani and Miller Capital Structure Theorem suggests that the cost of equity decreases as financial leverage increases.
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

The Modigliani and Miller Capital Structure Theorem, under the assumption of no taxes, suggests that the cost of equity increases as financial leverage increases, to compensate for the higher risk.

The Modigliani and Miller Capital Structure Theorem Suggests That the Cost