Which of the Following Is NOT a Conclusion Drawn from M&M's

question 90

Multiple Choice

Which of the following is NOT a conclusion drawn from M&M's Propositions 1 and 2?

• A) Firm value is determined by the left hand of the balance sheet, the firm's assets, and the cash flow generated by them.
• B) A firm can change its market value by splitting its cash flows into different streams.
• C) Shareholder's required return rises with leverage.
• D) The WACC does not change as capital structure change.
• E) The WACC is determined by the riskiness of the company's business (assets).

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Definitions:

Cash Dividend

A monetary payment paid to shareholders, typically out of the corporation's current earnings or accumulated profits.

Capital Budgeting

The process a business undertakes to evaluate potential major investments or expenditures to ensure profitability.

Ex-Dividend Date

The date on which a stock begins trading without the right to receive the next dividend payment, causing its price to adjust downwards.

Brokers

Intermediaries that facilitate buying and selling of securities, commodities, or other financial instruments on behalf of clients.