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What is miller - modigliani?

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Anonymous

14y ago
Updated: 1/19/2022

Quoted from Wikipedia: "The basic theorem states that, in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Therefore, the Modigliani-Miller theorem is also often called the capital structure irrelevance principle."

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Delia Auer

Lvl 10
3y ago

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What are the assumptions of the Modigliani Miller approach?

The Modigliani Miller approach assumes that it does not matter how a business or corporation is financed.


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