Firm X plans to increase its financial leverage by issuing debt and using the proceeds to repurchase equity.If you assume that the Modigliani and Miller assumptions hold,then the effect of this increasing financial leverage transaction should
A) increase the market value of Firm X's shares.
B) have no effect on the market value of Firm X's shares.
C) decrease the market value of Firm X's shares.
D) it is not possible to tell what will happen.
Correct Answer:
Verified
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