The Cost of Equity Capital, Based on M&M Proposition II

question 294

Multiple Choice

The cost of equity capital, based on M&M Proposition II, can be defined as:

• A) R_E = R_D+ (R_A- R_D) (D/E).
• B) R_E = R_A+ (R_A- R_D) (E/D).
• C) R_E = R_A+ (R_A- R_D) (D/E).
• D) R_E = R_A+ (R_D- R_A) (E/D).
• E) R_E = R_D- (R_D- R_A) (D/E).

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Definitions:

Pan-European Style

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