Article contents
General Proof of Modigliani-Miller Propositions I and II Using Parameter-Preference Theory
Published online by Cambridge University Press: 06 April 2009
Extract
The following proof of Modigliani and Miller's (MM) [2] famous propositions concerning the valuation of the firm and the cost of capital does not require the usual risk-class or arbitrage assumptions; the proof depends only on the Fundamental Theorem of Parameter-preference, which states that the riskpremium for security A is a linear combination of its comoments with the market index, .
- Type
- Research Article
- Information
- Copyright
- Copyright © School of Business Administration, University of Washington 1978
References
REFERENCES
- 1
- Cited by