M&M Proposition 2 states that the cost of a firm's common stock is related to
A) the debt-to-equity ratio.
B) the required rate of return on the firm's underlying assets.
C) the return of the market index.
D) a and b.
Answer: D
M&M Proposition 2 states that the cost of a firm's common stock is related to
A) the debt-to-equity ratio.
B) the required rate of return on the firm's underlying assets.
C) the return of the market index.
D) a and b.
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