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Basic Question 0 of 20
Which of the following would violate the assumptions necessary for the Modigliani and Miller (MM) capital structure irrelevance proposition?
B. There are no taxes.
C. There are no bankruptcy costs.
D. EBIT can be affected by the use of debt.
A. There are no transactions (brokerage) costs.
B. There are no taxes.
C. There are no bankruptcy costs.
D. EBIT can be affected by the use of debt.
User Contributed Comments 4
| User | Comment |
|---|---|
| kalps | M&M assumptions - EBIT cannot be affected by debt/equity |
| xyz007 | assumption ---debt has no effect on EBIT |
| sarath | Assumptions - Perfect world ...no tax , no BKRPTCY, Symmetric info , EBIT not affected by debt, No transaction costs.... |
| alejandroc | No evil in the world, no corrupt politicians, no hunger, no global warming... |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain the Modigliani-Miller propositions regarding capital structure
CFA® 2025 Level I Curriculum, Volume 2, Module 6.