Multiple choice

M.M. Approach is similar to ____ approach.

  1. Net Income Approach

  2. Net Operating Income Approach

  3. Both A and B

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Modigliani-Miller (M.M.) Approach in capital structure theory is similar to the NET OPERATING INCOME (NOI) Approach. Both approaches emphasize that firm value is determined by investment decisions (operating income) rather than financing decisions, rejecting the traditional view that capital structure affects firm value.

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