Which of the Following Statements Is Correct

question 74

Multiple Choice

Which of the following statements is correct?

• A) As a rule, the optimal capital structure is found by determining the debt-equity mix that maximises expected EPS.
• B) The optimal capital structure simultaneously maximises EPS and minimises the WACC.
• C) The optimal capital structure minimises the cost of equity, which is a necessary condition for maximising the share price.
• D) The optimal capital structure simultaneously minimises the cost of debt, the cost of equity, and the WACC.
• E) Each of the above statements is false.

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Definitions:

Shortest Wavelengths

Refers to light or other waves of the electromagnetic spectrum with the shortest length, typically associated with high energy and frequency, such as gamma rays or X-rays.

Blue

A primary color that is perceived when light with a dominant wavelength between approximately 450 and 495 nanometers is detected by the eye.

Microsaccades

Small, involuntary eye movements that occur during focus, helping to refresh the image on the retina and prevent visual fading.

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant stimuli over time.