Which of the Following Statements Is Most Correct

question 18

Multiple Choice

Which of the following statements is most correct?

• A) The optimal capital structure minimises the WACC.
• B) If the after-tax cost of equity financing exceeds the after-tax cost of debt financing, firms are always able to reduce their WACC by increasing the amount of debt in their capital structure.
• C) Increasing the amount of debt in a firm's capital structure is likely to increase the cost of both debt and equity financing.
• D) Answers a and c are both correct.
• E) Answers b and c are both correct.

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Definitions:

Assertiveness

The quality of being self-assured and confident without being aggressive, in the context of communicating one's views or needs.

Conscientiousness

Conscientiousness is a personality trait characterized by diligence, carefulness, and a desire to do a task well, often associated with strong self-discipline and a sense of responsibility.

Glass Ceiling

An invisible barrier that prevents certain individuals or groups, such as women and minorities, from advancing beyond a certain level in a hierarchy or organization, despite their qualifications.

Labyrinth

A complex structure of paths or tunnels in which it is easy to get lost; metaphorically used to describe complex problems or journeys.