2.5 Points

The beginning of the modern theory of finance was marked by:

A.the approach used by Modigliani and Miller.

B.the approach used by John and Williams.

C.the approach taken by Berk and DeMarzo.

D.the approach taken by Dan Harris.

Consider the following equation: U = E + D The term U in the equation is:

A.the same as the beta of the firm's assets.

B.the required return on the firm's equity.

C.the proportion of the firm financed with equity.

D.equal to zero if the firm's debt is riskless.