According to Modigliani Miller, and assuming perfect capital markets, which of the following statements is TRUE:

Group of answer choices

None of these alternatives

Investors of a firm with unlevered equity require a higher expected return to compensate for its increased risk.

Leverage increases the risk of equity only when there is risk that the firm will default.

Issuing equity will dilute existing shareholders ownership, so debt financing should be used instead

Even though leverage can increase a firms expected earnings per share (EPS), it does not lead to an increase in share price