Question
Consider the following statements: The main lesson to be learned from the Modigliani and Miller theory of capital structure assuming perfect markets and no taxation
Consider the following statements: The main lesson to be learned from the Modigliani and Miller theory of capital structure assuming perfect markets and no taxation is that: I. a firm cannot affect its value by changing its capital structure II. the value of the firm is determined by its total cash flows III. the weighted average cost of capital increases as financial leverage decreases IV. the weighted average cost of capital decreases as financial leverage decreases V. the weighted average cost of capital remains the same whatever the level of financial leverage.
Which of the statements is true?
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a
I and II only
b
I and V only
c
I, II and V only
d
II, III and IV only
e
None of the above
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