Which Factor Should Be Taken into Account When Deciding Between

question 33

Multiple Choice

Which factor should be taken into account when deciding between debt and equity finance?

• A) the security available
• B) the purpose of the finance
• C) the effect on earnings per share
• D) all of the above

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Definitions:

Equity Beta

A measurement of the volatility of a stock or equity in relation to the overall market, reflecting the systematic risk that cannot be diversified away.

Capital Structure

The mixture of debt and equity financing a company uses to fund its operations and growth.

Expected EPS

Estimated Earnings Per Share, forecasting a company's profitability on a per share basis.

Share Price

The price of a single share of a company's stock.