The Modigliani-Miller Theorem: Definition, Formula & Examples


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question 1 of 3

The Modigliani Miller theorem, or the MM theory, is known for _____.

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1. Which of the following was not an assumption for the MM theory?

2. MM Theory Proposition 1 talks about _____.

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About This Quiz & Worksheet

These study tools will bring to light how much you know about the Modigliani-Miller Theory. You'll be answering questions on topics like what this theory is known for and an assumption associated with the theory.

Quiz & Worksheet Goals

Find out what you know about these key points:

  • MM Theory Proposition 1
  • Proposition 2 of MM Theory
  • Tax aspect of proposition 2
  • The market value of a firm and how it's calculated

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the related lesson on the Modigliani-Miller theory
  • Information recall - access the knowledge you've gained regarding the calculation of a firm's market value
  • Knowledge application - use your knowledge to answer questions about MM Theory Proposition 1 and MM Theory Proposition 2

Additional Learning

Use the lesson entitled The Modigliani-Miller Theorem: Definition, Formula & Examples for further study on these topics:

  • Surplus money in your bank account
  • Nobel Laureates Franco Modigliani and Merton Miller
  • Examples of their MM Theory at work
  • No tax scenario and a taxable scenario