Statements regarding modigliani and miller propositions

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Reference no: EM131554734

Which of the following statements regarding Modigliani and Miller (MM)’s propositions is most accurate?

A. Firm value is maximized with a capital structure consisting of 100% equity

B. The required rate of return of equity increases as the firm increases its financial leverage

C. The use of debt financing increases the firm’s earnings volatility

D. It does not matter which capital structure firm choose because capital structure is irrelevant in terms of firm value, with or without taxes.

E. All of above are wrong.

Reference no: EM131554734

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