Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Highly Concentrated Industries

Industries in which a small number of firms control a large market share, often leading to decreased competition and higher barriers to entry for new competitors.

Labor Unions

Labor Unions are organizations formed by workers from related fields that work for the common interest of its members in terms of wages, benefits, and working conditions.

Foreign Purchases Effect

The impact on domestic currency and the balance of trade when residents of a country purchase foreign-made goods and services.

American Exports

Goods and services produced in the United States and sold to other countries, contributing to the country’s GDP and trade balance.