Question
Which of the following statements are correct in relation to Modigliani and Millers propositions in a frictionless perfect capital market? A. The required return on
Which of the following statements are correct in relation to Modigliani and Millers propositions in a frictionless perfect capital market? A. The required return on assets is equal to the weighted average cost of capital. B. The risk of a firms equity is determined by the debt-equity (D/E) ratio. C. A firms cost of equity is a linear function of the debt-equity (D/E) ratio. D. The cost of equity declines when the amount of leverage used by a firm rises. E. The debt-equity ratio of a firm is completely irrelevant for overall firm value. F. It is impossible for investors to create homemade leverage that replicates the firms leverage
Group of answer choices
A, B, C, and D only
A, B, C, and E only
B, C, D, and E only
B, C, E, and F only
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