All of the Following Statements Regarding Capital Structure Weights in the WACC

question 147

Multiple Choice

All of the following statements regarding capital structure weights in the WACC equation are correct except:

• A) The weights represent a specific intended financing mix.
• B) These target weights represent a mix of debt and equity that the firm will try to achieve or maintain over the planning horizon.
• C) As much as possible, the target weights should reflect the combination of debt and equity that management believes will maximize the firm's weighted average cost of capital.
• D) The firm should make an effort over time to move toward and maintain its target capital structure mix of debt and equity.

---

Definitions:

Economic Theories

A set of principles that explain the workings of and interactions within economies, influencing policies and understanding of wealth distribution.

Balanced Budgets

Financial planning or policy where total revenues are equal to or greater than total expenses within a specific period, preventing deficits.

Feminism

A socio-political movement aiming for the equality of the sexes, especially in terms of rights and opportunities.

New Deal

In response to the Great Depression, President Franklin D. Roosevelt launched a comprehensive program of financial reforms, regulations, and public works in the United States during the 1930s.