1. Modigliani and Miller proposed that the market value of any firm is independent of its capital structure. Capital structure is irrelevant only if:
A. Capital markets are efficient.
B. Each investor can borrow/lend on the same terms as the firm.
C. There are no tax benefits to debt.
D. Capital markets are efficient, each investor can borrow/lend on the same terms as the firm, and there are no tax benefits to debt.
2. Which of the following is NOT a potential advantage of speculating in futures?
Leverage
Ease of transacting
Low transactions costs
High and narrow probability distribution of expected returns