Which of the following is NOT a feature of the "perfect world" in M&M's theorem for optimal capital structure?
A) No taxes
B) No chance of bankruptcy
C) Perfectly efficient markets
D) Asymmetric information sets for all participants

Question

Quizplus · Accepted Answer

M&M's theorem assumes no taxes, no bankruptcy costs, perfectly efficient markets, and symmetric information among participants. Asymmetric information sets would contradict the premise of perfect market conditions outlined in the theorem.

Which of the Following Is NOT a Feature of the "Perfect