The Firm's Target Capital Structure Should Do Which of the Following

question 56

Multiple Choice

The firm's target capital structure should do which of the following?

• A) Maximize the earnings per share (EPS).
• B) Minimize the cost of debt (rd).
• C) Obtain the highest possible bond rating.
• D) Minimize the cost of equity (rs).
• E) Minimize the weighted average cost of capital (WACC).

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Definitions:

Enduring Power of Attorney

A legal document that allows an individual to appoint another person to make decisions on their behalf, even if they become mentally incompetent.

Contract of Agency

A legal agreement in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions.

Information

Data, facts, or knowledge provided or learned about something or someone.

Consciously Ratifies

The act of officially approving or confirming a decision or agreement with full awareness.