M&M Proposition II, Without Taxes, States That The

Multiple Choice

M&M Proposition II, without taxes, states that the:

A) capital structure of a firm is highly relevant.
B) weighted average cost of capital decreases as the debt-equity ratio decreases.
C) cost of equity increases as a firm increases its debt-equity ratio.
D) return on equity is equal to the return on assets multiplied by the debt-equity ratio.
E) return on equity remains constant as the debt-equity ratio increases.