Which of the following is NOT the assumptions of Modigliani and Miller without tax theory? A. Investors have different expectations on returns and risks. B. There are no taxes, transaction costs, or issuance costs associated with security trading. C. A firm's financing decisions neither change the cash flows generated by its investments, nor do they reveal new information about them. D. Investors and firms can trade the same set of securities at competitive market prices equal to the present value (PV) of their future cash flows.
Which of the following is NOT the assumptions of Modigliani and Miller without tax theory? A. Investors have different expectations on returns and risks. B. There are no taxes, transaction costs, or issuance costs associated with security trading. C. A firm's financing decisions neither change the cash flows generated by its investments, nor do they reveal new information about them. D. Investors and firms can trade the same set of securities at competitive market prices equal to the present value (PV) of their future cash flows.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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14. Which of the following is NOT the assumptions of Modigliani and Miller without tax theory?
| A. |
Investors have different expectations on returns and risks. |
|
| B. |
There are no taxes, transaction costs, or issuance costs associated with security trading. |
|
| C. |
A firm's financing decisions neither change the cash flows generated by its investments, nor do they reveal new information about them. |
|
| D. |
Investors and firms can trade the same set of securities at competitive market prices equal to the |
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