QUESTION 1 According to M&M, if the tax rate=0% then OA. O B. The optimal capital structure is all equity OC. WACC increases when leverage increases Total firm value is independent of capital structure .The optimal capital structure is all debt QUESTION 2 If the manager increases the firm's D/E ratio The firm's stock will have a higher expected return and less risk. The firm's stock will have a lower expected return and more risk. The firm's stock will have a higher expected return and more risk. The firm's stock will have a lower expected return and less risk