Chartered Financial Analyst Level 1

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Which of the following statements is most accurate? According to Modigliani-Miller Proposition I without taxes:

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Last updated: December 6, 2025 at 10:01

A

firm value can be created by changing a company's capital structure.

B

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any increase in the cost of equity must exactly offset the greater use of lower cost debt.

C

equity holders demand a higher return as leverage increases in order to offset increased risk.

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