The fact that almost every industry has a debt-equity ratio to which its firms adhere is evidence that the MM Propositions Blank______.Multiple choice question.are missing some real-world factorsdo work in the real world

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

A key assumption of MM Proposition I is that Blank______.Multiple choice question.corporations can borrow at a cheaper rate than individualsindividuals can borrow as cheaply as corporationsindividuals can only borrow at a higher rate than corporations

Based on the free cash flow hypothesis, firms should issue Blank______ debt.Multiple choice question.nolessmore

Select all that applyUnder the MM propositions with no taxes, managers cannot change the value of the firm by repackaging its securities because Blank______.Multiple select question.as debt is added, the equity becomes more riskycapital structures are fixedthe overall cost of capital cannot be reduceddebt is not cheaper than equity

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