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.
Ans: B) the cost of equity increases when a firm takes on a greater proportion of debt.
You might also like to view...
Recently, in developed countries, a knowledge worker's loyalty to his or her employer has ________ compared to his or her loyalty to his or her profession and colleagues.
A. no correlation when B. decreased C. remained the same D. increased
Assume that Village increases variable costs from $11 to $14 per person. Compute the new breakeven point in tickets and in sales dollars.
Village Arcade sells tickets at $25 per person as a one-day entrance fee. Variable costs are $11 per person, and fixed costs are $52,500 per month.
The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares
Indicate whether the statement is true or false
Which of the following statements is true of the doctrine of quasi contract?
A) It allows a court to award monetary damages to a defendant because no actual contract existed between the parties. B) It applies only where there is an enforceable contract between the parties. C) It is an equitable doctrine intended to prevent unjust enrichment. D) Agreement between parties to a quasi contract has been inferred from their conduct.