Which of the Following Statements Are Correct in Relation to M

question 30

Multiple Choice

Which of the following statements are correct in relation to M & M Proposition II with no taxes?
I.The required return on assets is equal to the weighted average cost of capital.
II.Financial risk is determined by the debt-equity ratio.
III.Financial risk determines the return on assets.
IV.The cost of equity declines when the amount of leverage used by a firm rises.

• A)I and III only
• B)II and IV only
• C)I and II only
• D)III and IV only
• E)I and IV only

---

Definitions:

Usage Rate

The quantity consumed or patronage (store visits) during a specific period. Frequency marketing focuses on usage rate.

Behavioral Segmentation

The process of dividing a market into groups based on consumer behaviors, such as purchasing habits or loyalty.

Product Features

The attributes or characteristics that make up a product, distinguishing it from others in the market.

User Status

The classification of users based on their engagement level, experience, or purchase history with a service or product.