M&M Proposition 1 assumes all of the following except that:
A) there are no tax.
B) there are no costs to acquiring information.
C) there are no transactions costs.
D) the real investment policy of the company is affected by its capital structure decisions.

Question

Quizplus · Accepted Answer

M&M Proposition 1 assumes that there are no taxes, no costs to acquiring information, and no transaction costs. However, it does not assume that the real investment policy of the company is affected by its capital structure decisions. In other words, M&M Proposition 1 assumes that the investment policy of the company is independent of its financing decisions.

M&M Proposition 1 Assumes All of the Following Except That