Please choose the only one correct statement below:

Select one:

a.

When investors use leverage in their own portfolios to adjust the leverage choice made by the firm, it is referred to as homemade leverage.

b.

By adding leverage, the returns on the firm are split between debt holders and equity holders, but equity holder risk remains the same because dividends are paid first.

c.

With perfect capital markets, in the absence of taxes, because different choices of capital structure offer a benefit to investors, they affect the value of the firm.

d.

In a setting where there is no risk that a firm will default, leverage does not change the risk of equity.