The optimal capital structure of a firm

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1. The optimal capital structure of a firm:

[A] will remain constant over time unless the firm makes an acquisition.

[B] will be the same for all firms in the same industry.

[C] will vary over time as taxes and market conditions change.

2. In a world with corporate taxes, MM theory implies that that all firms should choose an all-debt capital structure.

[A] True

[B] False

Reference no: EM131558672

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