Home » Finance for Everyone: Debt » Miller and Modigliani’s nobel prize winning framework provides all of the following insights, except: Miller and Modigliani’s nobel prize winning framework provides all of the following insights, except: 5. Question 5 Miller and Modigliani’s nobel prize winning framework provides all of the following insights, except: 1 point Given efficient markets, cheaper debt is offset by more expensive equity so that the firm’s overall cost of capital remains unchanged. This implies the value of the firm is unchanged. Given efficient markets, increasing cash flows increases the value of the firm When firms pay corporate taxes, the value of the firm can increase due to the interest tax shield When firms pay corporate taxes, the firm’s cost of capital decreases The firm can identify a range of capital structures to help determine its target debt ratio Other Questions Of This Category Considering “Indifference analysis”, which indicates the level of operating income (or earnings before interest and tax, EBIT) where EPS (earnings per share) are equal whether the firm uses debt or…Which of the following is true about government debt?If a firm has a debt to equity ratio of 50%, its overall debt ratio must be:Assume a firm earns net income of $10,000 with total assets of $200,000 - half of which is debt - and has 20,000 shares outstanding. Based on this information, its EPS (earnings per share), ROA…Which of the following factors influence how much debt a firm should take on?When a firm is determining its target debt ratio, which of the following is paramount?Which of the following statements are true concerning borrowing decisions?Access to borrow more is not a “free lunch”. This statement implicates which of the following?Information like salaries, interest from savings accounts, and dividends from investments, can be found on which document?Governments borrow because:What are some of the ways governments who have borrowed too much can resolve this problem?Except for one, all of the following institutions enable other governments to borrow more at a lower cost than they would have on their own:What are some of the signs suggesting that developed countries have borrowed too much money?Which of the following statements applies to student loans?What is an example of a revolving credit arrangement?
