Question: True or false, if false why? 1. When , by regulation, only banks can grant credit and firms cannot issue bonds, Modigliani Miller Proposition I

True or false, if false why?
1. When , by regulation, only banks can grant credit and firms cannot issue bonds, Modigliani Miller Proposition I does not hold
2. An asset with a covariance with the market lower than 1 and an expected return higher than that of the market lies above the security market line

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