Which of the Following Is Consistent with the Original Formulation

Multiple Choice

Which of the following is consistent with the original formulation of the Modigliani and Miller Capital Structure Theorem?

A) A firm's weighted average cost of capital decreases as financial leverage is used.
B) A firm's common stock price falls as financial leverage is used.
C) A firm's weighted average cost of capital and common stock price are unaffected by the amount of financial leverage used by the firm.
D) A firm's weighted average cost of capital increases as operating leverage is used.