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Which of the following statements is correct in relation to M&M theory with no taxes, and no bankruptcy costs? A. WACC increases when leverage increases.

Which of the following statements is correct in relation to M&M theory with no taxes, and no bankruptcy costs?

A. WACC increases when leverage increases.

B. The cost of equity increases when leverage increases.

C. The cost of debt decreases when leverage increases.

D. Business risk is determined by the debt-equity ratio.

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