Which of the Following Is NOT a Conclusion Drawn from M&M's

question 90

Multiple Choice

Which of the following is NOT a conclusion drawn from M&M's Propositions 1 and 2?

• A) Firm value is determined by the left hand of the balance sheet, the firm's assets, and the cash flow generated by them.
• B) A firm can change its market value by splitting its cash flows into different streams.
• C) Shareholder's required return rises with leverage.
• D) The WACC does not change as capital structure change.
• E) The WACC is determined by the riskiness of the company's business (assets).

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Definitions:

General Adaptation Syndrome

A three-stage response model (alarm, resistance, exhaustion) describing the body's short-term and long-term reactions to stress.

Hans Selye

A pioneering Hungarian-Canadian endocrinologist who is known for his research on the stress response and for introducing the concept of General Adaptation Syndrome.

Meyer Friedman

A cardiologist known for co-developing the theory that the Type A behavior pattern increases the risk of heart disease.

Walter Cannon

A physiologist known for his work on the fight or flight response and contributions to understanding the autonomic nervous system.