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QUESTION

Which of the following statements are correct in relation to MM Proposition II with no taxes?

Which of the following statements are correct in relation to M&M Proposition II with no taxes?I. The required return on assets is equal to the weighted average cost of capital.II. Financial risk is determined by the debt-equity ratio.III. Financial risk determines the return on assets.IV. The cost of equity declines when the amount of leverage used by a firm rises. answer options:a. I and III onlyb. II and IV onlyc. I and II onlyd. III and IV onlye. I and IV onlyanswer options:

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