D. 4 1. Modigliani and Miller's Proposition I states that: (0.5) 5 A the market value of any firm is independent of its capital structure the market value of a firm's debt is independent of its capital structure the market value of a firm's common stock is independent of its capital structure none of the options 6 B 7 C. 8 D 10 11 Answer 13 2. Generally, which of the following is true? (b- beta (0.5) 15 B 16 C 18 20 23