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.

---

Definitions:

Personal Property

All the property that is not real property; it includes movable objects and intangible rights.

Dominion

Dominance or control over a domain, territory, or realm.

Noxious Fumes

Harmful or poisonous gases, often produced by industrial processes or combustion, that can cause health problems or environmental damage.

Pollutants

Substances that contaminate air, water, or soil, potentially causing harm to human health, the environment, or property.