MBA 570 Walden University Module 5 The Modigliani Miller Propositions Discussion
Question Description
I’m working on a finance discussion question and need an explanation and answer to help me learn.
The Modigliani-Miller Propositions I and II have withstood over 50 years of empirical review and analysis. Explain what these propositions state, in general, and how they might impact financial decision-making within a firm. In addition, provide some indication of why they might fail in practice and based on these limitations, how firms should use these general ideas to make decisions about the leverage that they include in their capital structure.
Recommended Reading
- Bhattacharya, S. (1988). Corporate Finance and the Legacy of Miller and Modigliani. Journal of Economic Perspectives, 2(4), 135-147.
- Miller, M. (1988). The Modigliani-Miller Propositions After Thirty Years. Journal of Economic Perspectives, 2(4), 99-120.
- Ross, S. (1988). Comment on the Modigliani-Miller Propositions. Journal of Economic Perspectives, 2(4), 127-133.
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