MM and Miller also assumed that debt is riskless. How does the possibility of default on debt

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MM and Miller also assumed that debt is riskless. How does the possibility of default on debt cause equity to take on the characteristics of an option? What types of incentives for shareholders does this lead to?

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Intermediate Financial Management

ISBN: 978-1111021573

10th Edition

Authors: Brigham, Daves

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Question Posted: Feb 03, 2012 01:50 AM

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MM and Miller also assumed that debt is riskless. How does the possibility of default on debt

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If corporate debt is actually risky rather than riskless as MM assumed then managers really have the ...View the full answer

Intermediate Financial Management

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