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

question 57

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 is affected by both financial and operating leverage

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Definitions:

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by a lack of understanding for other cultures.

Cultures

The shared values, practices, and social behaviors of particular groups, communities, or societies, often distinguished by tradition, language, and collective identity.

Metric System

An international decimal system of weights and measures based on the meter for length and the kilogram for mass.

International Trade

The exchange of goods, services, and capital across international borders, facilitating global economic activity.