alleryStart learning →What does the original MM theorem assume?
AHigh bankruptcy costs
BDifferent borrowing rates
CCorporate tax on interest
DA perfect market, no taxes
Answer & Solution
Correct answer: D. A perfect market, no taxes
The result is derived with no transaction or bankruptcy costs, perfect information and no taxes.
Keep practising Corporate Finance
Browse all Corporate Finance questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
An optimal capital structure is one that does what?Why is debt in the capital structure beneficial up to a certain point?Which working capital technique converts debtors to cash?An investment bank helps a firm raise capital through which listings?Firms hedge market risk exposures mainly using what?Which tool is seen as aligning management with stockholder interests?Why do stockholders favor riskier projects than bondholders do?Acquisitions driven by a manager's wish for a larger company are known as what?