Modigliani and millers second theory

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Reference no: EM131531181

Over the years, researchers have proporsed numerous theories to explain what firm's capital structures should look like. Which of the following is included in Modigliani and Miller's second (with coporate taxes) theory?

A. the seperation of ownership and control causes agency costs

B. The probability of bankruptcy increases as the debt-to-assets ratio increases

C. Information asymmetry exisits between managers and investors

D. Interest is a tax-deductible expense and is therefore less expensive than equity financing.

Reference no: EM131531181

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