Answer Happy

In accordance with Modigliani and Miller Proposition I and
assuming no taxes, the value of the firm most
likely:
Group of answer choices
increases as the leverage ratio increases.
remains unchanged as the leverage ratio increases.
decreases as the leverage ratio increases.
Consider the following statements:
Statement 1: According to Jensen’s free
cash flow hypothesis, higher debt levels increase agency costs.
Statement 2: The costs associated with
asymmetric information decrease as more debt is issued.
Which of the following is most likely?
Group of answer choices
Only Statement 1 is correct.
Both statements are correct.
Only Statement 2 is correct.
Given that there are no taxes and no costs of financial
distress, as the proportion of debt in a company’s capital
structure increases:
Group of answer choices
The costs of equity increases, but the WACC remains the
same.
The cost of equity increases, but the WACC decreases.
The costs of equity and the WACC increase.