The Managerial Implications of Capital Structure Theory Include All Except

question 18

Multiple Choice

The managerial implications of capital structure theory include all except which of the following?

• A) Capital structure changes transmit important information to investors.
• B) Changes in capital structure result in changes in the market value of the firm's equity.
• C) Optimal capital structure is influenced heavily by the business risk facing the firm.
• D) Tax shield benefits from equity lead to increased firm value.

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Definitions:

Line-Angle Structure

A simplified drawing of a molecule where lines represent bonds and vertices represent carbon atoms, excluding hydrogen atoms for clarity.

Structure

The arrangement of and relations between the parts or elements of something complex.

Conformation

The spatial arrangement of atoms in a molecule that can be changed by rotating single bonds without breaking any chemical bonds.

Newman Projection

A method of visualizing the spatial arrangement of atoms by looking down the bond between two carbon atoms in a molecule.