What Is Optimal Capital Structure

question 26

Multiple Choice

What is optimal capital structure?

• A) It is the mix of debt, preferred stock, and common equity that maximizes profits.
• B) It is the mix of debt, preferred stock, and common equity that minimizes risk.
• C) It is the mix of debt, preferred stock, and common equity that minimizes the weighted cost to the firm of its employed capital.
• D) It is the mix of common and preferred stock that maximizes dividends to the stockholders.