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Modigliani and Miller Proposition II

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Definition of Modigliani and Miller Proposition II

Modigliani And Miller Proposition II Image 1

Modigliani and Miller Proposition II

A proposition by modigliani and miller which states that the cost of
equity is a linear function of the firm's debt-equity-ratio.



Related Terms:

attribute-based costing (ABC II)

an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
enhancements that the company wants to integrate into a product


GNMA-II

Mortgage-backed securities (MBS) on which registered holders receive an aggregate principal and
interest payment from a central paying agent on all of their certificates. Principal and interest payments are
disbursed on the 20th day of the month. GNMA-ii MBS are backed by multiple-issuer pools or custom pools
(one issuer but different interest rates that may vary within one percentage point). Multiple-issuer pools are
known as "Jumbos." Jumbo pools are generally longer and offer certain mortgages that are more
geographically diverse than single-issuer pools. Jumbo pool mortgage interest rates may vary within one
percentage point.


Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA)

A federal Act shielding employers from liability if they have made
a good-faith effort to verify a new employee’s identity and employment eligibility.


manufacturing resource planning (MRP II)

a fully integrated materials requirement planning system that involves
top management and provides a basis for both strategic
and tactical planning


Manufacturing resource planning (MRP II)

An expansion of the material requirements planning concept, with additional computer-based capabilities in the areas of
direct labor and machine capacity planning.



MM dividend-irrelevance proposition

Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.


MM's proposition I (debt irrelevance proposition)

The value of a firm is unaffected by its capital structure.


Modigliani And Miller Proposition II Image 2

MM's proposition II

The required rate of return on equity increases as the firm’s debt-equity ratio increases.


Modigliani and Miller Proposition I

A proposition by modigliani and miller which states that a firm cannot
change the total value of its outstanding securities by changing its capital structure proportions. Also called
the irrelevance proposition.


MRP II

see manufacturing resource planning


Policy-Ineffectiveness Proposition

Theory that anticipated policy has no effect on output.



 

 

 

 

 

 

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