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Author Question: Which of the following statements is a reasonable criticism of the MM and Miller models? (Read 508 times)

awgagawg

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on: Aug 7, 2023
Which of the following statements is a reasonable criticism of the MM and Miller models?

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Both MM and Miller assume that personal and corporate leverage are perfect substitutes. However, an individual investing in a levered firm has less loss exposure as a result of corporate limited liability than if “homemade” leverage had been used.


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Brokerage costs were assumed away by MM and Miller, making the switch from L to U costless. Even though brokerage and other transaction costs do exist, they would not impede the arbitrage process.


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MM initially assumed that corporations and investors can borrow at the risk-free rate, because most individual investors must borrow at the same rates as those paid by large corporations.


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MM and Miller assume that there are no costs associated with financial distress, and they also consider agency costs.

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Marked as best answer by awgagawg on Aug 7, 2023

Khareemom14

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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awgagawg

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

raenoj

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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