Question: Based on M&M Proposition 2, which of the following statement is true? A. The expected return on equity is a linear function of the debt-to-equity

Based on M&M Proposition 2, which of the following statement is true?

A. The expected return on equity is a linear function of the debt-to-equity ratio

B. All of them

C. The expected return on equity is positively related to the firms leverage

D. The risk to equity increases with the debt-to-equity ratio

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