Q53
The arbitrary process is the behavioral foundation for the ____________.
A.
MM approach
AnswerB.
XX approach
C.
Gorder approach
D.
Miller approach
Answer: Option A
Solution
Answer: Option A
Solution:
The arbitrary process is the behavioral foundation for the MM approach. The MM approach favors the Net operating income approach and agrees with the fact that the cost of capital is independent of the degree of leverage and at any mix of debt-equity proportions.