Modigliani and Miller Proposition I
Definition
A proposition indicating that a change to a business' capital structure does not necessarily change the total value of the business; in other words, a business can choose to finance its operations by either debt or the distribution (or withholding the profits) of shares, but businesses value is the sum of its money-making capabilities and the risk of its assets. Also called irrelevance proposition and capital structure irrelevance.
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