Which One of the Following Is an Implication of M&M

question 78

Multiple Choice

Which one of the following is an implication of M&M Proposition II,without taxes?

• A)A firm's optimal capital structure is 100 percent debt.
• B)WACC is unaffected by the capital structure of a firm.
• C)WACC decreases as the debt-equity ratio increases.
• D)A firm's capital structure is irrelevant.
• E)The risk of equity depends on both the degree of financial leverage and the riskiness of the firm's operations.

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Definitions:

Phenotype

The observable physical or biochemical characteristics of an organism, as determined by both genetic makeup and environmental influences.

Genetic Potential

The maximum physical or intellectual growth and development that a person can achieve, based on their genetic composition.

Additive Genes

Genetic models where the effects of individual genes add up to influence a trait, without dominance between alleles.

Dominant Genes

Genes that express their traits in the phenotype, regardless of the presence of their recessive counterparts in an organism's genotype.