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According to the Modigliani-Miller (MM) theory of capital structure in a perfect market, which of the following statements is false ? A. Leverage does not

According to the Modigliani-Miller (MM) theory of capital structure in a perfect market, which of the following statements is false?

A.

Leverage does not affect a firms weighted average cost of capital

B.

Leverage increases the risk of equity and therefore leverage increases a firms cost of equity

C.

The total cash flow received by all of a firm's security holders is equal to the total cash flow generated by the firm's assets

D.

There is an optimal capital structure that can maximize firm value

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