MM Proposition II with No Taxes Supports the Argument That

question 65

Multiple Choice

MM Proposition II with no taxes supports the argument that a firm's:

• A)unlevered equity is risk-free.
• B)cost of equity is inversely related to the firm's debt-equity level.
• C)cost of equity is unaffected by the firm's unlevered cost of capital.
• D)WACC will exceed the unlevered firm's cost of equity.
• E)WACC remains constant even if the firm changes its capital structure.

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