A key assumption of MM Proposition I is that Blank______.Multiple choice question.corporations can borrow at a cheaper rate than individualsindividuals can borrow as cheaply as corporationsindividuals can only borrow at a higher rate than corporations

Which of the following assumptions is necessary for MM Proposition I to hold?Multiple choice question.Personal taxes must be lower than corporate taxes.Managers must be acting to maximize the value of the firm.Interest rates must be low.Individuals can borrow on their own at an interest rate equal to that of the firm.

MM Proposition II shows that Blank______.Multiple choice question.the market value of the firm is unaffected by its capital structurethere is no risk involved with leverage when there are no corporate taxesthe cost of equity rises with leverageequity is less expensive than debt

Under the MM propositions with no taxes, managers cannot change the value of the firm by repackaging its securities because Blank______.Multiple select question.as debt is added, the equity becomes more riskythe overall cost of capital cannot be reducedcapital structures are fixeddebt is not cheaper than equity

The fact that almost every industry has a debt-equity ratio to which its firms adhere is evidence that the MM Propositions Blank______.Multiple choice question.are missing some real-world factorsdo work in the real world

MM Proposition I does not work with corporate taxes because Blank______.Multiple choice question.levered firms pay more taxes than unlevered firmslevered firms pay lower taxes than unlevered firmsdividends are tax deductible