Which of the Following Statements Is CORRECT

question 44

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 credit rating also maximizes the stock price.

---

Definitions:

Identical Characteristics

A term describing goods, services, or entities that have the same attributes and qualities, making them indistinguishable in certain respects.

Wage Differentials

The variations in wage rates due to differences in occupation, sector, qualifications, and experience among workers.

Labor Market

A marketplace where employers find workers and workers find jobs, governed by supply and demand for labor.

Productivity Differences

Variations in the efficiency and effectiveness with which firms or economies turn inputs into outputs.