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Question
The "Pure Modigliani and Miller Result" establishes, under restrictive assumptions, that the firm's stock price will be maximized if it uses virtually 100 percent debt. Which of the following real world conditions does the most to limit real world corporate debt-to-assets ratios to far less than 100 percent?
a. There are brokerage costs.
b. At high levels of debt revenues decline.
c. Investors can't really borrow at the same rate as corporations.
d. Interest rates increase as the debt-to-assets ratio rises.
e. Dividends are relevant in the real world.
Answer
This answer is hidden. It contains 1 characters.
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