MM Proposition II Is the Proposition That

question 80

Multiple Choice

MM Proposition II is the proposition that:

• A)supports the argument that the capital structure of a firm is irrelevant to the value of the firm.
• B)a firm's cost of equity capital is a positive linear function of the firm's capital structure.
• C)the cost of equity depends on the return on debt, the debt-equity ratio and the tax rate.
• D)the cost of equity is equivalent to the required return on the total assets of a firm.
• E)supports the argument that the size of the pie does not depend on how the pie is sliced.