Journal of Financial and Quantitative Analysis Vol. 13 No. 1 1978
General Proof of Modigliani-Miller Propositions I and II using Parameter- Preference Theory
Abstract
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, .
- DOI
- 10.2307/2330521
- Volume
- 13
- Issue
- 1
- Pages
- 65
- Sources
- openalex crossref