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Question: (a) Give a critical appraisal of the traditional Approach and (a) traditional approach and (b) the Modigliani-Miller Approach to the theory of capital structure.
(b) What is meant by the term leverage’? What are its types? With what type of risk is each leverage generally associated? Why is increasing leverage also indicative of increasing risk? State the situation when there is neither a financial risk nor business risk.
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