Which of the Following Is Consistent with the Original Formulation

question 94

Multiple Choice

Which of the following is consistent with the original formulation of the Modigliani and Miller Capital Structure Theorem?

• A)A firm's composite cost of capital decreases as financial leverage is used.
• B)A firm's common stock price falls as financial leverage is used.
• C)A firm's composite cost of capital and common stock price are unaffected by the amount of financial leverage used by the firm.
• D)A firm's composite cost of capital increases as operating leverage is used.

---

Definitions:

Family-Friendly Benefits

Employment benefits and policies designed to support employees in balancing their work responsibilities with family needs, such as flexible working hours and parental leave.

LBGT

An acronym representing lesbian, gay, bisexual, and transgender individuals, focusing on communities and identities based on sexual orientation and gender identity.

Harassment

Unwanted or unwelcome behavior that causes discomfort or harm, which can be sexual, verbal, physical, or psychological in nature.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.