M & M Proposition II says that the WACC is not influenced by changing the mix...
M & M Proposition II says that the WACC is not influenced by changing the mix of debt and equity because changes in leverage cause an offsetting change in the __________.
a. WACC
b. required return on equity
c. target leverage zones
d. secured debt hypothesis
e. none of the above
Homework Answers
Answer: Option b is correct
The change in required return on equity is offset by changes in
leverage and hence the weighted average cost of capital is not
influenced by changing the debt and equity mix as per M & M
Proposition II
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