What Should Be the Relation Between the Target Capital Structure

question 35

Multiple Choice

What should be the relation between the target capital structure for a firm and the firm's optimum capital structure?

• A) Target and optimum capital structures should be the same.
• B) Target capital structure is more conservative overall.
• C) Target capital structure contains more debt.
• D) Target capital structure excludes preferred stock.

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Definitions:

Panels

Groups of individuals selected to review or discuss specific topics, or a series of flat boards forming part of a structure or piece of furniture.

Negative Slope

Characteristic of a line or curve on a graph that shows a decrease in the value of one variable when another variable increases.

Positive Slope

In graphing terms, indicates an increase in the y-variable for an increase in the x-variable, typically reflecting a direct relationship between two variables.

Panels

Groups of people selected to provide feedback or opinions on various topics or a term used to refer to flat components, like solar panels, that form part of a larger structure.