The Optimal Capital Structure of a fiRm _____ the Marketed

question 203

Multiple Choice

The optimal capital structure of a firm _____ the marketed claims and _____ the nonmarketed claims against the cash flows of the firm.

• A) minimizes; minimizes
• B) minimizes; maximizes
• C) maximizes; minimizes
• D) maximizes; maximizes
• E) equates; (leave blank)

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting guidelines that govern how financial statements are prepared worldwide.

Reporting Units

Entities for which discrete financial information is available and reviewed by the segment manager to make operating decisions.

Outstanding Stock

The total number of shares of a corporation's stock that are currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Consolidation

The process of combining financial statements of parent and subsidiary companies into one comprehensive financial statement.