MM's Proposition I States That the Required Rate of Return

question 114

True/False

MM's proposition I states that the required rate of return on equity increases as the firm's debt-equity ratio increases.

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Definitions:

Business Entity Assumption

An accounting principle that treats a business as an independent entity separate from its owners for accounting and legal purposes.

Business's Assets

Resources owned by a company that have economic value and can be used to meet debts, commitments, or legacies.