A proposition of Modigliani and Miller (MM) which states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions. Also called an irrelevance result.
MM Proposition II
A proposition by Modigliani and Miller (MM) which states that the cost of equity is a linear function of the firm's debt-equity ratio.
pie model
A model of the debt-equity ratio of the firm, graphically depicted in slices of a pie that represents the value of the firm in the capital markets.
