A fiRm Should Select the Capital Structure Which

question 19

Multiple Choice

A firm should select the capital structure which:

• A)produces the highest cost of capital.
• B)maximizes the value of the firm.
• C)minimizes taxes.
• D)is fully unlevered.
• E)has no debt.

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Definitions:

Behavior

Everything we do that can be directly observed.

Social Facilitation Effect

The tendency for people to perform differently when in the presence of others, usually better on well-practiced tasks and worse on new tasks.

Genetic Predisposition

The inherent susceptibility to certain conditions or characteristics based on one's genetic makeup.

Arouses Us

Incites feelings, often of interest or excitement, in a group or individual.