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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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