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Please help me to answer this in full. 1. (15 Points) a. When a firm's stock price rises, a firm's D/V ratio falls (in market

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1. (15 Points) a. When a firm's stock price rises, a firm's D/V ratio falls (in market values). Interestingly, on average, data shows that firms issue more equity when this occurs, which further decreases leverage. What violation of the Modigliani & Miller assumptions might lead to this behavior? Why? b. Suppose that the culture in a particular industry is for firms to offer free food for their employees, free transportation to and from work, rooms dedicated to video games, and slides between floors. If the employees of these firms would be willing to work just as hard and for the same wages without these extra perks, what violation of Modigliani & Miller might be happening? Would this violation of M&M suggest a higher or lower level of debt would be optimal

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