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  3. which of the following is true? a) in a modiglia

Which of the following is True? a) In a Modigliani Miller setting with...

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Finance

Which of the following is True?

  1. a) In a Modigliani Miller setting with corporate profit taxation and in a Modigliani Miller setting without corporate profit taxation, the formula for the expected return on levered equity is the same as long as the corporation follows a constant debt-to- equity ratio policy.

  2. b) In a Modigliani Miller setting with corporate profit taxation and in a Modigliani Miller setting without corporate profit taxation, the formula for the expected return on levered equity is not the same if the corporation follows a constant debt policy.

  3. c) In a Modigliani Miller setting with perfect markets and no taxation you cannot affect the return of assets by changing the firms leverage.

  4. d) All of the above.

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