- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 6. Capital Structure
- Subject 3. Modigliani-Miller Capital Structure Propositions
CFA Practice Question
MM Propositions with Taxes state that the more debt a company uses, ______. I. the lower the WACC
II. the more value the company has
III. the higher the cost of equity
Correct Answer: I, II and III
About III: the cost of equity rises but at a lower rate than in the no-tax case.
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