Briefly describe Modigliani and Miller Proposition I and discuss the important conditions that are required to prove it to be true. Are they realistic?
If we incorporate Financial Distress or Bankruptcy Costs and also Taxes, then we have altered the fundamental assumptions of Modigliani and Miller. Explain the relationship between leverage and capital structure under the new assumptions.
What are some of the empirical findings on capital structure and how well does Modigliani and Miller theory predict them?
How might dividend payments be considered as informational signals?
How does the existence of taxes affect the optimal dividend policy of a firm?
Please explain how the expected growth rate of a company is related to the retained earnings.