The Optimal Capital Structure

question 63

Multiple Choice

The optimal capital structure:

• A)will be the same for all firms in the same industry.
• B)will remain constant over time unless the firm makes an acquisition.
• C)of a firm will vary over time as taxes and market conditions change.
• D)places more emphasis on the operations of a firm rather than the financing of a firm.
• E)is unaffected by changes in the financial markets.

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Definitions:

Normative Commitment

Organizational commitment based on an individual’s perceived obligation to remain with an organization.

Organizational Commitment

The strength of an individual’s identification with an organization.

Continuance Commitment

Organizational commitment based on the fact that an individual cannot afford to leave.

Counterproductive Work Behavior

Activities undertaken by employees that are against the interests or objectives of their employer.