Solomon concludes that
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The total market value of a firm and the cost of capital are independent of the capital strucure
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There is a definite impact on a firm's total market value when leverage is increased
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There is a definite impact on a firm's total market value when leverage is decreased
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None of the above
Reveal answer
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B
Correct answer
Explanation
Ezra Solomon's work in corporate finance, particularly regarding the traditional view of capital structure, argues that there is an optimal capital structure and that leverage does impact a firm's total market value.