McDonald, John F. (2011) The Modigliani-Miller Theorem with Financial Intermediation. Modern Economy, 02 (02). pp. 169-173. ISSN 2152-7245
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Official URL: https://doi.org/10.4236/me.2011.22022
Abstract
This paper shows that, if firms borrow at an interest rate that is greater than the rate at which they can lend, the value of a firm declines with the amount borrowed. The model assumes the possibility that a firm may go bankrupt, which introduces the need for financial intermediation. A modified version of the homemade lev-erage examples introduced by Modigliani and Miller [2] is used to introduce the concept. A state-preference model is used for a more formal proof.
| Item Type: | Article |
|---|---|
| Subjects: | Science Repository > Multidisciplinary |
| Depositing User: | Managing Editor |
| Date Deposited: | 28 Jun 2023 04:08 |
| Last Modified: | 18 Oct 2023 03:39 |
| URI: | http://research.manuscritpub.com/id/eprint/2557 |
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