MM's Proposition II States That The

question 79

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

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Definitions:

Unemployment Rate

The segment of workers within the labor force not employed but searching for work.

Assembly Line

A production process that divides the manufacture of a product into steps that are completed in a predefined sequence, often involving conveyor belts and workstations.

U.S. Industry

The collective group of manufacturing, services, and sector-specific companies operating within the United States.

Unemployment Rate

The figure showing unemployed individuals in the labor force who are searching for jobs actively.