There are no corporate or personal income tax
Investors are assumed to be rational and behave accordingly
There is no corporate tax though there are personal income tax
Capital markets are perfect
✅ The correct answer is D.
Capital markets are perfect is not an assumption in Miller and Modigliani approach. The Modigliani-Miller theorem (M&M) states that the market value of a company is calculated using its earning power and the risk of its underlying assets and is independent of the way it finances investments or distributes dividends.
Capital markets are perfect is not an assumption in Miller and Modigliani approach. The Modigliani-Miller theorem (M&M) states that the market value of a company is calculated using its earning power and the risk of its underlying assets and is independent of the way it finances investments or distributes dividends.