Which One of the Following Statements Is Correct in Relation

question 79

Multiple Choice

Which one of the following statements is correct in relation to M&M Proposition II, without taxes?

• A) The cost of equity remains constant as the debt-equity ratio increases.
• B) The cost of equity is inversely related to the debt-equity ratio.
• C) The required return on assets is equal to the weighted average cost of capital.
• D) Financial risk determines the return on assets.
• E) Financial risk is unaffected by the debt-equity ratio.

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Definitions:

Anatomical Neck

The segment of a bone, particularly in long bones like the humerus or femur, located just below the bone's head; it marks the transition between the head of the bone and the shaft.

Infraspinous Fossa

A concavity on the scapula serving as the attachment site for the infraspinatus muscle.

Subscapular Fossa

A concave surface on the anterior side of the scapula, serving as a site for muscle attachment.

Lateral Border

The side edge or boundary of an anatomical structure or organ.