Assume that there is corporate tax, but no other frictions. Based on the propositions of Modigliani and Miller, which statement is the least accurate? a. The weighted cost of capital decreases as the leverage ratio increases. Ob. The cost of debt increases as the leverage ratio increases. C. Firm value increases as the firm takes on more debts. O d. The cost of equity increases as the leverage ratio increases. e. The optimal structure is 100% debt.

WoeBeTide's chief objective is to meet its investment needs and maintain its target debt-equity ratio before paying dividends. WoeBeTide is following a dividend approach. Select one: a. cyclical b. stable C. compromise d. residual e. stochastic

Which of the followings proposes that there is a tradeoff between level of borrowing and benefit of tax shields up a point after which financial distress costs start kicking in?     CAPM     Static capital structure theory     M&M Proposition I     M&M Proposition II     Pecking order theory   Floation cost includes     Gross spread     Direct expenses     Indirect expenses     Abnormal returns     All of above   Which one of the followings states that the value of a firm is unrelated to the firm's capital structure?     Capital Asset Pricing Model     M&M Proposition I     M&M Proposition II     Law of One Price     Efficient Markets Hypothesis

While the use of debt can lower the average cost of capital, there is a point that the debt leverage gets high enough it increases the cost of capital. Group of answer choices True False