# 1. With corporate taxes as the only market imperfection, how does the value of the firm...

###### Question:

1. With corporate taxes as the only market imperfection, how does the value of the firm with leverage differ from its value without leverage? 2. How does leverage affect risk and return for investors? 3. What is the most important contribution of the Black-Scholes formula? 4. What are risk-neutral probabilities? How can they be used to value options?

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