Which of the Following Statements Is CORRECT

question 48

Multiple Choice

Which of the following statements is CORRECT?

• A) The capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (WACC).
• B) The capital structure that maximizes the stock price is also the
• Capital structure that maximizes earnings per share.
• C) The capital structure that maximizes the stock price is also the capital structure that maximizes the firm's times interest earned
• (TIE) ratio.
• D) Increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this
• Still may raise the company's WACC.
• E) If Congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage
• Companies to increase their debt ratios.
• Medium/Hard:

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Definitions:

Flash Patterns

Sequences of light emissions, often seen in bioluminescent organisms, used for communication, mating, or predation.

Recombination

The process by which genetic material is physically mixed during sexual reproduction, leading to the production of offspring with combinations of traits that differ from those found in either parent.

Gametogenesis

The process by which gametes, the sex cells, are produced in the gonads (ovaries and testes) through a sequence of meiotic cell divisions and differentiation.

Genetic Variation

The diversity in gene frequencies within a population, caused by mutations, genetic recombination, and other factors.