Question: Which statement is NOT correct? According to MM theory Case 1 (no corporate or personal taxes and no bankruptcy costs), the value of the firm

Which statement is NOT correct? According to MM theory Case 1 (no corporate or personal taxes and no bankruptcy costs), the value of the firm is NOT affected by changes in the capital structure. According to MM theory Case 2 (with corporate taxes, no personal taxes and bankruptcy costs), firms should use 100% debt. MM theory Case 2 (with corporate taxes, no personal taxes and bankruptcy costs) implies that debt use increases firm's WACC. According to MM theory Case 1 (no corporate or personal taxes and no bankruptcy costs), WACC is a constant since it only depends on the risk level of firm's assets. Question 18 (4 points) 3 for 1 stock split is the same as a stock dividend. 100% 200% 400%

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