M&M Proposition II, Without Taxes, Is the Proposition That

question 54

Multiple Choice

M&M Proposition II, without taxes, is the proposition that:

• A) the capital structure of a company has no effect on that company's value.
• B) the cost of equity depends on the return on debt, the debt-equity ratio, and the tax rate.
• C) a company's cost of equity is a linear function with a slope equal to (RA − RD).
• D) the cost of equity is equivalent to the required rate of return on assets.
• E) the size of the pie does not depend on how the pie is sliced.

Understand the process and goals of effective communication.

Recognize the principles of professionalism in communication.

Understand the dynamics and types of formal and informal communication networks within organizations.

Recognize the importance and application of an audience-centered approach in effective communication.

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Definitions:

Positive

Characterized by or displaying affirmation, constructive attributes, or optimism; also in economics, indicating numbers or conditions above zero or in surplus.

Complementary Goods

Products or services that are typically consumed together, as the consumption of one enhances the value or desire for the other.

Normal Good

A category of product that sees a rise in demand when consumer incomes go up, and a decrease when incomes fall.

Cross Elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in price of another good, indicating the degree of substitutability between the two goods.