Which of the Following Statements Best Describes Optimal Capital Structure

question 19

Multiple Choice

Which of the following statements best describes optimal capital structure?

• A) As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.
• B) The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.
• C) The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.
• D) The optimal capital structure simultaneously maximizes common share price and minimizes the WACC.

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Definitions:

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The belief that one controls one's own destiny and outcomes are a result of one's own efforts.

Stress

A physical or emotional response to external or internal pressures, challenges, or demands.

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A condition characterized by reduced blood flow to the heart muscle due to build-up of plaque in the coronary arteries, leading to chest pain and potentially heart attacks.