Which of the Following Statements Is CORRECT

question 93

Multiple Choice

Which of the following statements is CORRECT?

• A) The capital structure that maximizes the stock price is also the capital structure that maximizes earnings per share.
• B) The capital structure that maximizes the stock price is also the capital structure that maximizes the firm's times interest earned (TIE) ratio.
• C) Increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this still may raise the company's WACC.
• D) If Congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage companies to increase their debt ratios.
• E) The capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (WACC).

Understand the importance of equity investments and personal assets in securing financing.

Understand the concept of duality in consumer theory and how it relates to utility maximization.

Identify and apply the principle of equal marginal utility per dollar spent across goods.

Comprehend and apply the concept of the Lagrange multiplier in the context of constrained optimization problems.

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Definitions:

Early Adulthood

A period in human development that typically ranges from late teens or early twenties to the thirties, characterized by exploration and establishing life goals.

Elderly

The elderly category refers to individuals typically aged 65 and above, characterized by various biological, psychological, and social changes.

Emotional Arousal

A state of heightened physiological activity and emotional intensity that can enhance memory, perception, and problem-solving skills.

Aggressive Action

Behaviors intended to harm or injure another being, be it physically or psychologically.