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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
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. | II and IV only | |
b. | I, II, and III only | |
c. | I, II, and IV only | |
d. | I and IV only | |
e. | II, III and IV only |
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