Which of the Following Statements Is CORRECT

question 21

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.

Identify factors that can cause variances and understand their implications for management decision-making.

Analyze the effects of buying decisions on inventory levels and variance analysis.

Assess the impact of variances on performance evaluation systems.

Understand the treatment of year-end balances in variance accounts.

---

Definitions:

Encoding

The initial process of converting information into a form that can be stored in memory, involving perception, awareness, and comprehension.

Storage

The process of retaining information over time in memory.

Rehearsal

The cognitive process of repeatedly practicing or reviewing material to enhance memory retention.

Five-Dollar Bill

A banknote valued at five units of currency, typically issued by national governments.