Proposition II from M&M Says That the Cost of Equity

question 68

Multiple Choice

Proposition II from M&M says that the cost of equity is a function of which of the items below?

• A)The required return on assets (which is the same for firms with identical assets or investment choices)
• B)The cost of debt
• C)The debt-equity ratio of the firm
• D)All of these

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Definitions:

Proactive Aggression

Aggressive behavior that is premeditated and intended to achieve a specific goal, rather than being a response to an immediate threat.

Instrumental Aggression

Instrumental Aggression is a type of behavior aimed at achieving a certain goal or objective, rather than stemming from anger or emotion.

Displaced Aggression

Any behavior that intentionally harms a substitute target rather than the provocateur.

Indirect Aggression

Any behavior that intentionally harms another person who is physically absent.