The work of Modigliani and Miller produced a near 100% debt/value mix for firms in a world of taxes. As it turns out, the theoretical and the actual debt/value ratio for most firms are almost identical at just about 100%

Indicate whether the statement is true or false.


Answer: FALSE
Explanation: Although the work of Modigliani and Miller produced a near-100% debt mix for firms in a world of taxes, the actual debt-to-equity ratio for most firms falls far short of 100% debt financing.

Business

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