Modigliani and Miller (M&M)Proposition I states:
A)overall market value of the firm = market value of equity - market value of debt.
B)overall market value of equity = market value of the firm+ market value of debt.
C)overall market value of the firm = market value of equity + market value of debt.
D)overall market value of debt = market value of equity + market value of the firm.

Question

Quizplus · Accepted Answer

M&M Proposition I states that the overall market value of a firm is equal to the sum of the market value of its equity and debt. Therefore, choice C is the correct option.

Modigliani and Miller (M&M)Proposition I States