Modigliani-Miller Theorem

Modigliani-Miller Theorem

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Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. The Modigliani-Miller theorem (of Franco Modigliani, Merton Miller) forms the basis for modern thinking on capital structure. The basic theorem states that, under a certain market price process (the classical random walk), in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Therefore, the Modigliani-Miller theorem is also often called the capital structure irrelevance principle. Modigliani was awarded the 1985 Nobel Prize in Economics for this and other contributions.show more

Product details

  • Paperback | 112 pages
  • 152 x 229 x 7mm | 177g
  • Ject Press
  • United States
  • English
  • 6136690829
  • 9786136690827