According to MM II, as a Firm's Debt-Equity Ratio Decreases

question 62

Multiple Choice

According to MM II, as a firm's debt-equity ratio decreases:

• A) its financial risk increases.
• B) its operating risk increases.
• C) the required rate of return on equity increases.
• D)the required rate of return on equity decreases.

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Definitions:

Alcohol

A chemical compound, specifically ethanol, commonly found in drinks such as beer, wine, and spirits, known for its psychoactive effects on the human body.

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A psychoactive drug derived from the Cannabis plant, used for medical or recreational purposes, known for its relaxing effects.

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Natural compounds in the body that activate the same neural receptors as cannabinoids found in cannabis, involved in various physiological processes.