What is the "cost of capital" to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be obtained by many different media, ranging from pure debt instruments, representing money-fixed claims, to pure equity issues, giving holders only the right to a pro-rata share in the uncertain venture? This question has vexed at least three classes of economists: (1) the corporation finance specialist concerned with the techniques of financing firms so as to ensure their survival and growth; (2) the managerial economist concerned with capital budgeting; and (3) the economic theorist concerned with explaining investment behavior at both the micro and macro levels.


Franco Modigliani and Merton H. Miller. "The cost of capital, corporation finance and the theory of investment." The American economic review (1958): 261-297.

Merton Miller Quotes

What is the cost of capital to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be...

What is the cost of capital to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be...

What is the cost of capital to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be...

What is the cost of capital to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be...