Which of the following statements is not true regarding Miller's analysis?
A)There is an optimal debt/equity ratio for the corporate sector.
B)There is no optimal debt/equity ratio for individual companies.
C)Shareholders benefit from the tax saving of interest on debt.
D)Securities issued by different companies will appeal to different clientele.

Question

Quizplus · Accepted Answer

Miller's analysis states that shareholders do not benefit from the tax savings of interest on debt, as the increase in the firm's value due to the tax savings is offset by the increase in financial risk. Therefore, statement C is not true regarding Miller's analysis.

Which of the Following Statements Is Not True Regarding Miller's