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True or False: The final Modigliani-Miller Theorem #3 says that the effects of setting firm leverage too high are that it makes the firm fragile
True or False: The final Modigliani-Miller Theorem #3 says that the effects of setting firm leverage too high are that it makes the firm fragile and prone to financial distress. Therefore, for firms that are large and highly profitable and have low leverage (like Apple), Modigliani-Miller Theorem #1 should apply -- that is, the level of firm leverage should not affect firm value, only slicing the pie differently between bondholders and shareholders.
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