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Which of the following statements about the Modigliani and Miller (MM) propositions is false? According to MM Proposition II, the positive relationship between leverage and
Which of the following statements about the Modigliani and Miller (MM) propositions is false? According to MM Proposition II, the positive relationship between leverage and the required return on equity is stronger when tax effects are considered MM Proposition II with no taxes derives from the assumption that a firm's WACC must equal the cost of capital for an all-equity version of the firm MM Proposition I with taxes supports the notion of a positive relationship between the amount of debt in a levered firm and the value of the firm According to MM. Proposition I with no taxes, homemade leverage can duplicate the effects of corporate leverage if individuals can borrow at the corporate borrowing rate MM Proposition I with no taxes argues that the value of the firm is unaffected by its capital structure
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