2. Which of the following statement is true regarding the Modigliani and Miller (M&M) propositions (1958) in a perfect financial market? A) Capital structure is irrelevant because of the assumption that investors and companies have differing tax rates. B) It is assumed that the firm's future cash flows remain fixed under any circumstances. C) The basic lesson of M&M propositions is that company's capital budgeting decisions are dependent upon the company's capital structure decision. D) The debt-to-equity ratio is an important measure of the firm's operational risk. The firm's cost of capital (WACC) is not affected by leverage; however, the firm's cost of equity RE may be affected by leverage. E)