Looking down the list of winners of the Nobel memorial prize in economics, two names are causing bankers across the world to break into a cold sweat. They are Franco Modigliani (laureate in 1985) and Merton H. Miller (laureate in 1990). Both men have been dead for years but their most important idea lives on with the undignified name of M&M.

M&M refers to an important-seeming decision for any company: how much should it be funded by borrowing, and how much through raising money by issuing shares or retaining profits? Some companies, famously Apple, have no debt to speak of. Others, including any bank you can name, raise most of their resources by borrowing rather than issuing shares.

I say “important-seeming”, because M&M, the Modigliani-Miller theorem, is an elegant proof that under certain circumstances the debt/equity mix of a company's funding doesn't actually affect its value at all.