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When an investor borrows additional funds to buy shares

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Reference no: EM132696769

Problem 1: When an investor borrows additional funds to buy shares, she is implementing ____________________.

Select one:

a. sound financial risk management.

b. home-made leverage.

c. M&M Proposition, Part II.

d. M&M Proposition, Part I.

Problem 2: In a world without taxes (and without many other financial frictions), M&M Proposition I suggests that ...

Select one:

a. there is a unique, optimal amount of debt.

b. firm value increases in the use of debt.

c. firm value decreases in the use of debt.

d. firm value is unaffected by the use of debt.

Reference no: EM132696769

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