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What is Modigliani-Miller Theory Explained about?

Franco Modigliani and Merton Miller published their seminal paper on capital structure in 1958. Their theory, known as the MM theory, states that the value of a firm is independent of its capital structure when there are no taxes, bankruptcy costs, or asymmetric information. They showed that investors would receive the same payoffs regardless of whether a company was financed through equity, debt, or a combination of both. As a result, the market value of an all-equity firm should be equal to the market val

Author

S G

Language

EN