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

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Definitions:

Emergency Braking

The act of applying the brakes quickly and forcefully to stop a vehicle in the shortest possible distance in response to an emergency.

Significant Loss

A considerable reduction in value, functionality, or quantity of something, often financially quantified.

Secondary Circuit

An auxiliary or additional circuit that works alongside or provides support to the main electrical circuit.

Steering Column

The shaft or column that connects the steering wheel to the steering mechanism, facilitating vehicle steering control.