Please mark the only INCORRECT statement about the CAPITAL STRUCTURE of the firm in the context of a perfect world without taxes as used in Modigliani Miller a Leverage is irrelevant when determining the risk of equity for the firm b Without taxes, the firm's average cost of capital (rwacc) with leverage is the same as for the unlevered firm c Without taxes, if a firm engages in a leverage recapitalization (borrows by issuing bonds and repurchases stocks with the full amount of the bond issue), then neither the Value of the firm V nor its stock price Ps should change after the transaction is complete d Levered equity can increase expected returns but at expense of higher volatility for stock prices

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Question: Please mark the only INCORRECT statement about the CAPITAL STRUCTURE of the firm in the context of a perfect world without taxes as used in

Please mark the only INCORRECT statement about the CAPITAL STRUCTURE of the firm in the context of a perfect world without taxes as used in Modigliani Miller

	a.	Leverage is irrelevant when determining the risk of equity for the firm
	b.	Without taxes, the firm's average cost of capital (rwacc) with leverage is the same as for the unlevered firm
	c.	Without taxes, if a firm engages in a leverage recapitalization (borrows by issuing bonds and repurchases stocks with the full amount of the bond issue), then neither the Value of the firm V nor its stock price Ps should change after the transaction is complete
	d.	Levered equity can increase expected returns but at expense of higher volatility for stock prices

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