Modigliani and Miller (M&M) Proposition II states:
A) the cost of equity does not change when a firm takes on a greater proportion of debt.
B) the cost of equity increases when a firm takes on a greater proportion of debt.
C) the cost of debt increases when a firm takes on a greater proportion of equity.
D) the cost of equity decreases when a firm takes on a greater proportion of debt.
Answer: B
You might also like to view...
Which type of organization is dependent on proposals?
A) Large profit-making organizations B) Smaller profit-making organizations C) Nonprofit organizations D) All of these
"Do you drink alcohol?" is a legally acceptable interview question
Indicate whether the statement is true or false
Identify and describe one shortcoming of a sales-driven marketing philosophy.
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. Purchasing equipment is considered an operating activity on the Statement of Cash Flows. 2. Financing activities on the Statement of Cash Flows represent decisions made by management to buy or sell long term assets. 3. If a business is planning on growth, it will generally issue additional dividends to shareholders. 4. Account titles such as Salaries Expense and Rent Expense would be numbered starting with a 3. 5. An account numbered 321 would be considered a Stockholders' Equity account as it begins with a