Which of the Following Statements Is CORRECT

question 93

Multiple Choice

Which of the following statements is CORRECT?

• A) The capital structure that maximizes the stock price is also the capital structure that maximizes earnings per share.
• B) The capital structure that maximizes the stock price is also the capital structure that maximizes the firm's times interest earned (TIE) ratio.
• C) Increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this still may raise the company's WACC.
• D) If Congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage companies to increase their debt ratios.
• E) The capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (WACC).

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Definitions:

Dispersed Participants

Individuals involved in an activity who are geographically separated or located in various places.

Employee Fatigue

The state of physical or mental exhaustion among workers, often resulting from excessive workloads, stress, or lack of rest.

Vocal Quality

The characteristics of a person's voice, including tone, pitch, and volume, which can affect communication effectiveness.

Meeting Summary

A written or verbal recapitulation of the key points and decisions made during a meeting.