Modigliani and Miller (M&M) hypothesized that both dividend policy and capital structure policy are irrelevant in...

Modigliani and Miller (M&M) hypothesized that both dividend policy and capital structure policy are irrelevant in determining the value of a firm. Outline the arguments they used to reach their positions, including the assumptions underlying those arguments. With reference to relevant academic literature, discuss at least one reason why the M&M hypotheses might not hold in practice for BOTH dividend and capital structure policy.

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