The modigliani and miller hypothesis suggests that capital structure doesn't matter. all of the following conditions need to be met for this hypothesis to be true except select one: a. capital structure consists only of stocks and bonds. b. all corporate net income is paid out as dividends. c. corporate income is not subject to taxation. d. securities are traded in perfect or efficient markets.

The false statement is letter "B": all corporate net income is paid out as dividends.

Explanation:

The Modigliani-Miller Theorem or M&M is used in financial and economic studies to analyze the value of a firm such as a business or a corporation. The M&M theorem states that a firm's value is based on its ability to earn revenue plus the risk of its underlying assets. This value is independent of the way the company distributes its profits or finances its operations.

In that case, dividends have nothing to do with how the M&M theorem values a business.

The price for a vanguard  bond will be $1204.48

Explanation:

We are given the face value of the bond so now we will look for the present value at which the vangaurd bond can be sold for so firstly we are given the bonds face value which is $1000 and an annual coupon rate of 8% plus the mature period of 20 years so we will use this information to find the bonds future value at a coupon rate which is the face value in 20 years time using the formula Fv = Pv (1+i)^n

where Fv is the future face value of the bond

Pv is the present value of the bond which is $1000

i is the coupon rate of 8%

n is the period the bond will mature in

therefore now we substitute the above mentioned values:

Fv = 1000(1+8%)^20

Fv = $4660.957144 this is the future face value of the bond now we will find the present value of the bond using the interest rate of 7% considering the return i want to find the value of the vanguard bond now using the same above formula but finding the present value at 7% per annum:

Pv= Fv/ (1+i)^n

where Fv is the future value above for the bond

Pv is the present value price of the bond which we are looking for

i is the interest rate i require which is 7%

n is the period of 20 years the bond took to mature.

therefore we substitute to the above mentioned formula:

Pv = $4660.957144/(1+7%)^20 then compute on a calculator

Pv = $1204.48 which will be the the price i'm willing to pay for the vanguard bond.