Which of the Following Statements Are Correct in Relation to M

Multiple Choice

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.

A) I and III only
B) II and IV only
C) I and II only
D) III and IV only
E) I and IV only