The concept of homemade leverage is most associated with:
A)M & M Proposition I with no tax.
B)M & M Proposition II with no tax.
C)M & M Proposition I with tax.
D)M & M Proposition II with tax.
E)static theory proposition.

Question

Quizplus · Accepted Answer

Homemade leverage is associated with Modigliani and Miller (M&M) Proposition I with no tax, which states that in a perfect market, the value of a firm is unaffected by its capital structure. Investors can create their own leverage by borrowing on personal accounts to adjust their risk exposure.

The Concept of Homemade Leverage Is Most Associated With