In at least 200 words, fully answer Concept Question 7 on page 486. Also, does this information contradict or support the MM proposition?
Observed Capital Structures Refer to the observed capital structures given in Table 15.3 of the text. What do you notice about the types of industries with respect to their average debt-equity ratios? Are certain types of industries more likely to be highly leveraged than others? What are some possible reasons for this observed segmentation? Do the operating results and tax history of the firms play a role? How about their future earnings prospects? Explain.
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