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Modigliani and Miller’s (M&M) Hypothesis

  • Michael Szenberg
  • Lall Ramrattan
Chapter
  • 158 Downloads
Part of the Great Thinkers in Economics Series book series (GTE)

Abstract

Integral to the Keynesian paradigm in economic theory is the study of how investment affects the economy. The Keynesian investment demand schedule relates an aggregate investment to a riskless rate of interest. Modigliani felt that the Keynesian model of investment was inadequate, since it did not deal with uncertainty, and it focused mainly on debt. Financial and managerial economists were more interested in the cost of capital vs. risk. They wanted to extrapolate the idea of uncertainty to the maximization of profit and the value of the firm.1

Keywords

Cash Flow Capital Structure Sharpe Ratio Market Valuation Dividend Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Michael Szenberg and Lall Ramrattan 2008

Authors and Affiliations

  • Michael Szenberg
    • 1
  • Lall Ramrattan
    • 2
  1. 1.Pace UniversityNew YorkUSA
  2. 2.University of CaliforniaBerkeley ExtensionUSA

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