Modigliani and Miller argue that when the firm has no acceptable investment opportunities, it should
A) close its doors.
B) distribute the unneeded funds to the owners.
C) lower its cost of capital.
D) retain the funds until an acceptable project arises.

Question

Quizplus · Accepted Answer

Modigliani and Miller suggest that if a firm has no profitable investment opportunities, it should distribute excess funds to shareholders rather than retaining them, as this maximizes shareholder value.

Modigliani and Miller Argue That When the Firm Has No