Which One of the Following Is an Implication of M&M

question 21

Multiple Choice

Which one of the following is an implication of M&M Proposition II without taxes?

• A)A firm's optimal capital structure is 100 percent debt.
• B)WACC is unaffected by the capital structure of a firm.
• C)WACC decreases as the debt-equity ratio increases.
• D)A firm's capital structure is irrelevant.
• E)The risk of equity is affected by both financial and operating leverage.

---

Definitions:

Autonomy Vs. Shame

A stage in Erik Erikson's theory of psychosocial development where toddlers develop a sense of personal control over physical skills and a sense of independence, or otherwise experience shame and doubt about their abilities.

Trust Vs. Mistrust

A stage in Erik Erikson's theory of psychosocial development where infants learn whether or not they can trust the people around them.

Identity Crisis

A period of uncertainty and confusion in which a person's sense of identity becomes insecure, typically due to a change in their expected aims or role in society.

Middle Adulthood

A life stage typically ranging from about 40 to 65 years old, characterized by stability, growth in career and family life, and facing the reality of aging.