Under MM II assumptions, the expected return on equity is equal to the expected return on assets for a levered firm.

Name: Under MM II assumptions, the expected return on equity is equal to the expected return on assets for a levered firm.
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Under MM Proposition II with no taxes, the expected return on equity increases with leverage due to the risk of debt being borne by the equity holders, making it higher than the expected return on assets for a levered firm.

Under MM II Assumptions, the Expected Return on Equity Is