Finance questions that are very difficult! The question is attached!

2.Consider the following claims. Answer them with \"True\" or \"False\" and your explanation. No credit will be given if no explanation is shown. a) According to M&M Proposition 2, the values of the firms will always increase as they raise more debts since 1) interests on corporate debts are tax-deductible, 2) debts are easier to get 3) all firms are \"borne\" equal 4) using debts represents the firm's ability to generate cash 5) none of the above. b) If the capital market is so efficient that all essential information for the firms' values is disclosed in the public, then 1) no one will be able to profit in the market 2) no one will be able to obtain arbitrage profits 3) no firm can pay its corporate income tax 4) everyone will have the same opinion about the capital market 5) none of the above. c) One of the drawback of Net Present Value principle is that 1) one will easily tend to accept the project(s) that have less years of cash flows if other things being equal. 2) the discounted cash flows do not consider possibilities in options for alternative decisions such as timing, deferment and abandonment. 3) the IRR function is more accurate to assess the capital budgeting decisions. 4) the discount rate is always set in advance 5) none of the above. d) The expected rate of return for a stock when determined by the Capital Asset Pricing Model (CAPM) is 1) the \"goal (or target)\" of the rate of return for the firm's equity 2) the benchmark rate of return 3) the cost of capital of the firm 4) the growth rate of the stock price 5) none of the above. e) Capital budgeting is to 1) determine the best capital structure for the firm in raising capital from the capital market, 2) determine the sources of capital that provide the lowest cost of capital, 3) consider the benchmark rate of return for the firm's stock 4) determine which investment project is optimal 5) none of the above