With the Introduction of Risky Debt,MM Argues That The

Multiple Choice

With the introduction of risky debt,MM argues that the:

A) cost of equity increases at a decreasing rate as the debt/equity ratio increases beyond a certain level.
B) cost of equity continues to increase as the debt/equity ratio increases.
C) cost of debt increases at a decreasing rate as the debt/equity ratio increases beyond a certain level.
D) company cost of capital increases as the debt/equity ratio increases beyond a certain level.