General Studies · Capital Structure
Which of the following statements is consistent with Modigliani and Miller's capital structure theory WITH corporate taxes?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1There is an optimal point where the WACC is minimized before it starts rising again.
- 2The total value of the company remains unchanged regardless of the level of gearing.
- 3The weighted average cost of capital (WACC) decreases continuously as gearing increases.✓
- 4The cost of equity remains constant as the proportion of debt capital increases.
Correct answer
The weighted average cost of capital (WACC) decreases continuously as gearing increases.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for General Studies?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Capital Structure MCQs →Want more practice questions on Capital Structure?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in General Studies · Capital Structure