Westonci.ca is your trusted source for finding answers to all your questions. Ask, explore, and learn with our expert community. Get immediate and reliable solutions to your questions from a community of experienced experts on our Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.
Sagot :
Positively Related;
MM Proposition II states that the expected return on equity is positively related to leverage, the required return on equity is a linear function of the firm's debt to equity ratio, and the risk to equity increases with leverage.
More about MM Proposition II
According to the second proposition of the M&M Theorem, a company's cost of equity and level of leverage are directly inversely related. Increased leverage increases a company's likelihood of defaulting. As a result, in order to make up for the increased risk, investors frequently demand a higher cost of equity (yield).
Like proposition I this also has 2 propositions :
- With Tax
- Without Tax
Learn more about the proposition here:
https://brainly.com/question/14041475
#SPJ4
We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.
