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17. Based on classical Modigliani-Miller propositions, a firms financial leverage (the amount of debt issued relative to its asset value) should have no effect on
17. Based on classical Modigliani-Miller propositions, a firms financial leverage (the amount of debt issued relative to its asset value) should have no effect on its firm value. However, in reality it is not necessarily true. What are the reasons for which financial leverage might affect firm value and why?
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