Which of the Following Statements Is CORRECT

question 36

Multiple Choice

Which of the following statements is CORRECT?

• A)The capital structure that maximizes expected EPS also maximizes the price per share of common stock.
• B)The capital structure that minimizes the interest rate on debt also maximizes the expected EPS.
• C)The capital structure that minimizes the required return on equity also maximizes the stock price.
• D)The capital structure that minimizes the WACC also maximizes the price per share of common stock.
• E)The capital structure that gives the firm the best credit rating also maximizes the stock price.

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Definitions:

Annual Salary

The total amount of money an employee earns in one year before taxes and other deductions.

Commission Rate

The percentage of a sale price that is paid to an agent or employee for their sales efforts or services.

Stockbroker

A professional who buys and sells stocks and other securities for clients in exchange for a fee or commission.

Transaction

An agreement or communication carried out between a buyer and a seller to exchange an asset for payment.