&M's trade-off theory and Ross' signalling theory Aa Aa over the years, researchers have proposed numerous theories to explain what firms' capital structures should look like. Some of the assumptions in Modigliani and Miller's trade-off theory are listed, Which assumption illustrates the critical difference between M&M's trade-off and Ross's signaling theories? 2 Managers and investors have the same information. O The personal income tax rate is zero. O There are no brokerage costs. O Investors can borrow at the same interest rate as corporations. Suppose that Ross's Signaling theory is correct. Harris Inc. is planning a large expansion and needs to raise new capital. If management thinks the firm's stock is overvalued and its prospects are poor while investors are unaware of these opinions, will management want to raise capital using debt or equity? O Debt D Equity &M's trade-off theory and Ross' signalling theory Aa Aa over the years, researchers have proposed numerous theories to explain what firms' capital structures should look like. Some of the assumptions in Modigliani and Miller's trade-off theory are listed, Which assumption illustrates the critical difference between M&M's trade-off and Ross's signaling theories? 2 Managers and investors have the same information. O The personal income tax rate is zero. O There are no brokerage costs. O Investors can borrow at the same interest rate as corporations. Suppose that Ross's Signaling theory is correct. Harris Inc. is planning a large expansion and needs to raise new capital. If management thinks the firm's stock is overvalued and its prospects are poor while investors are unaware of these opinions, will management want to raise capital using debt or equity? O Debt D Equity