Briefly discuss the following question, “Does a perfect capital market exist?”. Support your
1. What type of capital structure should a firm choose and why? In you answer, be sure to
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include capital structure fallacies and their effects on a firm’s decision. 150 words
2. Define and discuss MM Proposition I with its implications, and the roles of homemade
leverage and the Law of One Price in the development of the proposition. 150 words
3. What is leveraged recapitalization and what effects does it have on the value of equity?