M&M Proposition I with No Tax Supports the Argument That

question 84

Multiple Choice

M&M Proposition I with no tax supports the argument that:

• A) business risk has no effect on the return on assets.
• B) the cost of equity rises as leverage rises.
• C) a company's debt-equity ratio is completely irrelevant.
• D) business risk is irrelevant.
• E) homemade leverage is irrelevant.

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Definitions:

Homeostasis

The tendency of the body to maintain a steady state.

Eustress

Positive stress that motivates and enhances one's functioning or performance.

External Locus of Control

The belief that one's life outcomes are largely determined by external forces beyond one's personal control or influence.

High Self-efficacy Expectations

The belief in one's own ability to succeed in specific situations or accomplish a task, which can play a significant role in how goals, tasks, and challenges are approached.