Acme is able to have highest debt-equity ratio in industry

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Reference no: EM131915802

Acme Inc., has the highest debt-equity ratio in its industry. It has regularly sold most of its bonds over the last 30 years to Ajax Holdings, a large institutional investor (like a pension fund or an insurance company). Given the lessons of Modigliani and Miller Proposition 1, explain how Acme is able to have the highest debt-equity ratio in its industry.

Reference no: EM131915802

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