M & M Proposition II Is the Proposition That

Multiple Choice

M & M Proposition II is the proposition that:

A) the capital structure of a firm has no effect on the firm's value.
B) the cost of equity depends on the return on debt, the debt-equity ratio, and the tax rate.
C) a firm's cost of equity is a linear function with a slope equal to (R_A - R_D) .
D) the cost of equity is equivalent to the required rate of return on a firm's assets.
E) the size of the pie does not depend on how the pie is sliced.