QUESTION 2 Which statements are inconsistent with Modigliani Miller Propositions I and II ? A firm can increase its total value by issuing new equity and reducing its leverage A firm can increase its total value by issuing bonds and buying back some of its shares The cost of capital of a given firm decreases when the firm issues bonds at the risk-free rate and uses the proceeds to buy back some of its shares The cost of capital of a given firm increases when the firm issues bonds at the risk-free rate and uses the proceeds to buy back some of its shares The return on equity of a given firm increases when the firm issues bonds at the risk-free rate and uses the proceeds to buy back some of its shares