1. In their first model, do Modigliani Miller believe that capital structure affects firm valuation? How about in their second model?

1. In their first model, do Modigliani & Miller believe that capital structure affects firm valuation? How about in their second model? Explain what causes the difference between these two conclusions.

6. A CFO is evaluating different options for returning value to shareholders, and is considering 1) cash dividends, 2) stock dividends, or 3) share repurchases. Explain to her which you think is the best choice to deliver value to shareholders, and which you think is the worst. Be sure to justify your answer.