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Basic Question 15 of 18
The possibility of bankruptcy has a negative effect on the value of the firm because:
II. Reorganization is costless but risk is not.
III. A bankruptcy has real costs associated with it.
IV. Value enhancing strategies are no longer available.
I. Increased bankruptcy risk lowers value.
II. Reorganization is costless but risk is not.
III. A bankruptcy has real costs associated with it.
IV. Value enhancing strategies are no longer available.
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Learning Outcome Statements
explain the Modigliani-Miller propositions regarding capital structure
CFA® 2024 Level I Curriculum, Volume 2, Module 6.