In MM's analysis, which one of these is a residual?
A) Debt acquisition
B) Investment policy
C) Financing decisions
D)Payout decisions

Question

Quizplus · Accepted Answer

In MM's (Modigliani and Miller) analysis, payout decisions are considered a residual because they are determined after the firm has made its investment and financing decisions. The residual is what is left over to be paid out to shareholders.

In MM's Analysis, Which One of These Is a Residual