MM's Proposition II States That The

question 5

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:

Sustainable Energy

Energy obtained from sources that are essentially inexhaustible and capable of being replenished or maintained for future generations without depleting natural resources.

Full-Cost Pricing

A pricing strategy that includes all direct, indirect, fixed, and variable costs in the price of a product or service.