MM's Proposition II States That The

question 5

Multiple Choice

MM's proposition II states that the:

• A) expected return on equity increases as financial leverage increases.
• B) expected return on assets decreases as expected return on debt decreases.
• C) firm's capital structure is irrelevant to value determination.
• D) greater the proportion of equity, the higher the expected return on debt.

---

Definitions:

Small Request

A strategy in persuasion where one starts with a minor request to increase the likelihood of compliance with a larger request later.

Visual Stimulus

Any object, environment, or image that elicits a visual response or reaction by being perceived through the sense of sight.

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, coordinating bodily functions and responses.

A-delta Fibres

Myelinated nerve fibers primarily involved in the transmission of sharp, acute pain signals to the brain.