Which of the following assumptions was not part of the original Modigliani and Miller Model?
A)Securities trade in perfectly efficient capital markets.
B)Securities trade with no transaction costs.
C)Income taxes are fixed.
D)Rates for borrowing do not change regardless of the amount borrowed.
E)Rates for borrowing are the same for investors and companies.

Question

Quizplus · Accepted Answer

The original Modigliani and Miller Model assumes that there are no taxes, which means that income taxes are not considered at all, rather than being fixed.

Which of the Following Assumptions Was Not Part of the Original