If a Firm Is Operating at Its Optimal Capital Structure

question 59

Multiple Choice

If a firm is operating at its optimal capital structure, then its weighted average cost of capital must be __________ and its value must be __________.

• A) maximised; maximised
• B) minimised; minimised
• C) maximised; minimised
• D) minimised; maximised
• E) None of the above is a correct answer.

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Definitions:

Type I Error

The mistaken dismissal of an accurate null hypothesis, frequently referred to as a false positive.

Effect Size

A quantitative measure of the strength of a phenomenon, used to indicate the magnitude of a difference or relationship within the context of a statistical analysis.

T-Tests

Statistical tests used to compare the means of two groups to see if there is a significant difference between them.

Type I Error

A Type I Error occurs when a true null hypothesis is incorrectly rejected, also known as a "false positive."