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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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