MM Proposition II,without Taxes,implies That the Required Return on Equity

question 71

Multiple Choice

MM Proposition II,without taxes,implies that the required return on equity is

• A)a result of homemade leverage.
• B)inversely related to the firm's debt-to-equity ratio.
• C)directly affected by the firm's debt-to-equity ratio.
• D)independent of the firm's capital structure.
• E)a linear function of the market's rate of interest.

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Definitions:

Markup

Overhead and profit-oriented increment on the cost price of goods.

Sweater

A knitted garment typically made of wool, cotton, or synthetic yarn, worn over the upper body to provide warmth.

0.51%

A percentage, typically representing an interest rate, dividend yield, or other financial ratio indicating a small change or amount.

Sum of Money

An amount of money expressed as a total figure, without specifying denominations or breakdown.