The basic lesson of M&M theory is that the value of a company is dependent upon:
A) the company's capital structure.
B) the total cash flows of that company.
C) minimizing the marketed claims.
D) the amount of the company's marketed claims.
E) size of the stockholders' claims.

Question

Quizplus · Accepted Answer

The basic lesson of Modigliani and Miller (M&M) theory is that under certain assumptions, the value of a company is determined by its total cash flows and is independent of its capital structure.

The Basic Lesson of M&M Theory Is That the Value