Whenever the cost of capital for an all-equity firm is greater than the cost of debt, the cost of equity Blank______.Multiple choice question.decreases with leverageincreases with leverageis unaffected by leverage

Under MM Proposition II, a firm's cost of equity capital is Blank______ related to the firm's debt-equity ratio provided the cost of capital for an all-equity firm exceeds the cost of debt.Multiple choice question.negativelynotpositivelyindirectly

MM Proposition II shows that Blank______.Multiple choice question.the market value of the firm is unaffected by its capital structurethere is no risk involved with leverage when there are no corporate taxesthe cost of equity rises with leverageequity is less expensive than debt

Select all that applyUnder MM with no taxes, as debt is Blank______ to capital structure, the cost of equity Blank______.Multiple select question.removed; increasesadded; increasesadded; decreasesremoved; decreases

When an investor borrows money and uses it to purchase stocks is called Blank______.Multiple choice question.homemade de-leverageraising debthomemade equityhomemade leverage

An increase in the value of a previously all-equity firm occurs when debt is borrowed to repurchase stock because Blank______.Multiple choice question.shareholders prefer levered firmsshareholders capture the interest tax shielddebt has the same cost as equitydebt reduces the cost of equity