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In a world where corporate taxation exists, MM Proposition II a) implies that the required return on equity is a result of homemade leverage. b)
In a world where corporate taxation exists, MM Proposition II
a) implies that the required return on equity is a result of homemade leverage.
b) implies that the required return on equity is a linear function of the market's rate of interest.
c) implies that the required return on equity is inversely related to the firm's debt-to-equity ratio.
d) implies that the required return on equity is independent of the firm's capital structure.
e) implies that the required return on equity is directly affected by the firm's debt-to-equity ratio.
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