Which of these statements apply MM Proposition II without taxes?

I. The expected return on equity is positively related to leverage.

II. The value of a firm cannot be changed by changing its capital structure.

III. Risk to equity holders increases with leverage.

IV. The expected return on equity is affected by the firm's debt-to-equity ratio.

Multiple Choice

II and IV only

I, II, and III only

I, III, and IV only

I and III only

I, II, III, and IV