Which of the following statements is true in a perfect M&M world?
A) The value of a firm is independent of both its cash flow and its control rights.
B) Levered equity is riskier than full ownership of the firm, and full ownership of a firm is riskier than the debt of a firm.
C) The value of a firm is independent of its cash flow rights, but not of its control rights.
D) The levered equity of a firm will normally offer a lower expected return than full ownership of a firm.
Correct Answer:
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