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You Are Walking Along the Shoreline but the Material Under

question 22

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You are walking along the shoreline but the material under your feet isn't sand, but instead is large cobbles and you occasionally have to scramble around small boulders. You are on _______ ,


Definitions:

Capital Components

The various sources of funding that a company uses to finance its operations and growth, including debt and equity.

Capital Structure

The mix of the three capital components (debt, preferred stock, and equity) used by a firm. The optimal capital structure is the structure at which stock price is maximized, all other things held equal. Also see Target capital structure.

Equity

The value of an ownership interest in property, including shareholders' equity in a company.

Tax Deductible

Expenses that can be subtracted from gross income, lowering the taxable income and thus the amount of tax owed.

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