As a General Rule, the Capital Structure That

question 152

Multiple Choice

As a general rule, the capital structure that:

• A) minimizes the cost of equity also maximizes the stock price
• B) maximizes the stock price also minimizes the weighted average cost of capital
• C) minimizes the cost of debt also maximizes the expected earnings per share
• D) increases operating leverage for a given quantity of output, increases business risk

---

Definitions:

Shipments

The transportation of goods from one location to another.

Distributors

Entities involved in the process of making products available for consumption by distributing them from producers to end consumers.

Fair Value Option

An accounting approach allowing companies to report certain assets and liabilities at fair market values rather than historical costs.

Fair Value Option

An accounting choice to measure certain financial assets and liabilities at fair market values.