Modigliani and Miller's first article led to the conclusion that capital structure is extremely important,and that every firm has an optimal capital structure that maximizes its value and minimizes its cost of capital.

Question

Quizplus · Accepted Answer

Modigliani and Miller's first article concluded that under certain assumptions, including no taxes and perfect capital markets, the capital structure of a firm does not affect its total value or cost of capital, implying there is no optimal capital structure in these conditions.

Modigliani and Miller's First Article Led to the Conclusion That