Which of the following statements are correct in relation to M&M Proposition II with no taxes? I. The firms business risk is equal to the weighted average cost of capital. II. Financial risk is determined by the debt-equity ratio. III. Financial risk determines the firms return on assets. IV. The cost of equity declines when the amount of equity used by a firm rises.

a. I, II, and IV only

b. I and IV only

c. II, III and IV only

d. II and IV only

e. I, II, and III only