Which of the Following Statements Is CORRECT

question 60

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Disjunction

A logical operation that yields a true statement if at least one of its component statements is true.

Tautological Disjunct

A component of a logical statement that repeats the same information in different words, making it unconditionally true.

Tautology

A statement in logic that is true in every possible interpretation or a redundant statement that does not add new information.

Truth Table

A truth table is a mathematical table used in logic to determine whether a proposition is true or false for all possible logical variables.