M & M Proposition I with No Tax Supports the Argument

question 60

Multiple Choice

M & M Proposition I with no tax supports the argument that:

• A)business risk determines the return on assets.
• B)the cost of equity rises as leverage rises.
• C)the debt-equity ratio of a firm is completely irrelevant.
• D)a firm should borrow money to the point where the tax benefit from debt is equal to the cost of the increased probability of financial distress.
• E)homemade leverage is irrelevant.

Recognize the importance of active listening and providing support in interpersonal communication.

Understand the concept of incentive motivation and its external influences.

Compare and contrast different motivational models, particularly those of Tolman and Hull.

Recognize the distinction between reward and drive reduction.

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