The Optimal fiRm Value Is Achieved When The

question 243

Multiple Choice

The optimal firm value is achieved when the:

• A) Present value of the bankruptcy cost is minimized.
• B) The interest tax shield on debt is maximized.
• C) Weighted average cost of capital is minimized.
• D) Debt-equity ratio is maximized.
• E) Total net gain from leverage is equal to zero.

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Definitions:

Logistic Regression

A statistical method used to analyze a dataset in which there are one or more independent variables that determine an outcome. The outcome is measured with a dichotomous variable (where there are only two possible outcomes).

Mammogram

An imaging test that uses low-dose X-rays to detect anomalies in the breasts, often used for cancer screening.

Race/Ethnicity

Categories used to describe groups of people with common ancestry, cultural history, or social affiliation.

Multicollinearity

A situation in regression analysis where two or more predictor variables are highly correlated, potentially leading to difficulties in estimating the relationship between variables and outcomes.