Final answer:
The true statement regarding the Modigliani and Miller (M&M) model is that it assumes perfect capital markets and suggests that the value of a firm is independent of its capital structure.
Step-by-step explanation:
The true statement regarding the Modigliani and Miller (M&M) model is a) The model assumes perfect capital markets. The M&M model is foundational in finance theory and represents two propositions that revolutionized the understanding of capital structure in firms. The first proposition, b) The model suggests that the value of a firm is independent of its capital structure, indicates that in perfect capital markets (without taxes, bankruptcy costs, and asymmetric information), the value of a firm is not affected by how the firm is financed. Their second proposition extends on this by describing the cost of equity in a leveraged firm. Although M&M did explore the effects of taxes in further work, the original model did not incorporate taxes. Therefore, c) is not correct in the context of the original M&M propositions. Finally, d) The model is based on the assumption of asymmetric information is also incorrect because the M&M model assumes that all participants in the market have equal access to relevant financial information, which is an example of perfect rather than asymmetric information.