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:

Evolution

A scientific theory explaining the process through which species change over time through natural selection, genetic variation, and other mechanisms.

Prohibition

The legal act of prohibiting the manufacture, transportation, and sale of alcohol, most notably implemented in the United States from 1920 to 1933.

Republicans

A political party in the United States that traditionally champions conservative ideologies, including limited government, lower taxes, and a free-market economy.

Northern Democrats

A faction of the Democratic Party in the United States before the Civil War, mainly based in the North, known for their diverse views on slavery.