In a world without taxes, M&M Proposition I contends that:

A) The cost of equity is dependent upon the debt-ratio of the firm.
B) A firm's cost of equity varies with its cost of debt.
C) The total value of the firm remains constant regardless of the debt-equity mixture applied.
D) A firm's WACC also determines its cost of equity.
E) The cost of capital is a linear function with a positive slope.

M&M Proposition I

A theory stating that the value of a leveraged firm is the same as the value of an unleveraged firm provided there are no taxes, bankruptcy costs, and asymmetric information.

Debt-Ratio

is a financial metric that compares a company's total debt to its total assets, showing how much of the company's assets are financed by debt.

Capital Structure

Refers to how a firm finances its overall activities and growth through different sources of funds, such as debt and equity.