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.

Distinguish between different types of probability distributions (e.g., Bernoulli, Poisson).

Understand the application of cumulative distribution functions.

Understand the properties and behaviors of different probability distributions including normal, exponential, triangular, and uniform distributions.

Calculate probabilities and parameters (mean, variance, expected value) for various probability distributions.

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