Managers Should Not Change the Capital Structure Unless It Departs

question 28

Multiple Choice

Managers should not change the capital structure unless it departs significantly from the optimal level because such a change would

• A) change incentives of stakeholders.
• B) reduce dividends.
• C) incur transactions costs.
• D) increase fixed costs.

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Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on the willingness to pay.

Antitrust Laws

Regulations established to prevent monopolies and promote competition among businesses.

Treatment

Medical or psychological care given to patients for illnesses or conditions.

Social Regulation

Social regulation involves government actions aimed at improving health, safety, and the environment, often impacting how businesses operate.