The Capital Structure Weights Which Are Used to Compute a fiRm's

question 24

Multiple Choice

The capital structure weights which are used to compute a firm's weighted average cost of capital are based on the:

• A) Relative book values of the firm's debt and equity.
• B) Total face value of the outstanding debt and the book value of the firm's equity.
• C) Total face value of the outstanding debt and the market value of the firm's equity.
• D) Market value of both the firm's debt and its equity.
• E) Historical average debt-equity ratio of the firm.

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Definitions:

Endorsement

The act of signing one's name on the back of a check or other negotiable instrument, which allows it to be transferred or cashed.

Payees

Individuals or entities to whom money is payable, often seen in the context of checks or promissory notes.

Negotiation

The process of discussing and arriving at a mutual agreement between parties, often involving compromise or conciliation.

Depositary Bank

A financial institution that holds and manages securities for its clients, facilitating the trading of these securities.