I have a basic understanding the MM theorems, but what exactly does one mean by a violation of the MM propositions?

Heres a question from a mock i took recently…

“The team suggests reducing the divident payout ratio from 40 to 20%. Despite how variable earnings can be the team belives that additional earnings retained b the firm will reduce debt to target levels in a 5 year time span and reduce the cost of equity as the debt is decreased”

Based on the MM propositions without taxes the statement is

A) Correct

B) Incorrect, as MM Prop 1 is violated

C) Incorrect becase MM Prop 1 and Prop 2 are violated

Can anyone please help!