Assignment: Analyse WACC Theory And MM Mode
Modigliani and Miller (1958) and Miller and Modigliani (1961) provide a new perspective on optimal capital structure and dividend policy. Using arbitrage arguments, they prove that under very restrictive assumptions neither capital structure nor dividend decisions matter. Therefore, such decisions should not have any impact on the market value of a firm. Because financing, capital structure, and dividend decisions do not enhance shareholder value, they are deemed to be irrelevant.
Required:
Using finance theory and recent developed model by Fama and French (2016), provide an argument on implications of related factors and market risk sensitivity.
Notes.
2-3 references are required (from textbooks and academic journals ONLY).
Corporate Finance - Jonathan B. Berk, Peter M. DeMarzo 2014 (electronic resource). Available online.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.