MM Proposition I without taxes is used to illustrate:
A)the value of an unlevered firm equals that of a levered firm.
B)that one capital structure is as good as another.
C)leverage does not affect the value of the firm.
D)capital structure changes have no effect on stockholders' welfare.
E)All of the above.

Question

Quizplus · Accepted Answer

MM Proposition I without taxes states that in a perfect market, the value of a firm is unaffected by its capital structure, implying all the given options are correct interpretations.

MM Proposition I Without Taxes Is Used to Illustrate