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Multiple choice

Directions: Choose the correct option for the given question: According to MM approach, the value of a firm is affected by the debt-equity mix.

  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the original Modigliani-Miller (MM) hypothesis in a perfect market, the value of a firm is independent of its capital structure (debt-equity mix).

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