Which one of the following statements is accurate according to M&M Proposition II, without taxes? Multiple Choice Financial risk determines the return on assets. The required return on assets is equal to the weighted average cost of capital. Financial risk is unaffected by the debt-equity ratio. The cost of equity remains constant as the debt-equity ratio increases. The cost of equity is inversely related to the debt-equity ratio.
Which one of the following statements is accurate according to M&M Proposition II, without taxes? Multiple Choice Financial risk determines the return on assets. The required return on assets is equal to the weighted average cost of capital. Financial risk is unaffected by the debt-equity ratio. The cost of equity remains constant as the debt-equity ratio increases. The cost of equity is inversely related to the debt-equity ratio.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Which one of the following statements is accurate according to M&M Proposition II, without taxes?
Multiple Choice
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Financial risk determines the return on assets.
-
The required return on assets is equal to the weighted average cost of capital.
-
Financial risk is unaffected by the debt-equity ratio.
-
The cost of equity remains constant as the debt-equity ratio increases.
-
The cost of equity is inversely related to the debt-equity ratio.
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