Question: 2 Maximizing Firm Value versus Maximizing Shareholder Interests Explain why, in a world with no taxes, transaction costs or financial distress costs, maximizing firm value

2 Maximizing Firm Value versus Maximizing Shareholder Interests Explain why, in a world with no taxes, transaction costs or financial distress costs, maximizing firm value is the same as maximizing share value. Are business risk and financial risk the same thing? If Firm A has greater business risk than Firm B, will it also have a higher cost of equity capital? Explain.

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