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Discuss the importance of the perfect capital markets assumptions in deriving the Modigliani and Miller's (M-M) irrelevance theorem. (i) Which perfect capital markets assumptions need

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Discuss the importance of the perfect capital markets assumptions in deriving the Modigliani and Miller's (M-M) irrelevance theorem. (i) Which perfect capital markets assumptions need to be relaxed to derive the bankruptcy cost/tax shield trade-off theory of capital structure? Why? (ii) Discuss how the trade-off explanation is derived and critically assess its ability to explain the observed capital structure regularities

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