1. Which capital structure theory recognizes the fact that investors and managers do not have the same information regarding a firm’s prospects?

2. The capital structure that maximizes the stock price is also the one that the___________ WACC.

3. In Modigliani & Miller’s Proposition I with taxes the value of a levered firm is equal to the value of an unlevered firm plus____________ .

4. In Modigliani & Miller without taxes, what is the optimal debt to equity ratio?

5. The trade-off theory of capital structure states that debt initially adds value. Explain why

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Jarrod Robel
Jarrod RobelLv2
28 Sep 2019

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