The MM theory with taxes implies that ﬁrms should issue maximum debt.In practice, this is not true because:
A)debt is more risky than equity.
B)bankruptcy is a disadvantage to debt.
C)ﬁrms will incur large agency costs of short term debt by issuing long term debt.
D)Both A and B.
E)Both B and C.

Question

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The Answer of The MM theory with taxes implies that ﬁrms should issue maximum debt.In practice, this is not true because:
A)debt is more risky than equity.
B)bankruptcy is a disadvantage to debt.
C)ﬁrms will incur large agency costs of short term debt by issuing long term debt.
D)Both A and B.
E)Both B and C.

The MM Theory with Taxes Implies That ﬁRms Should Issue