According to the Empirical Evidence, Which of the Following Statements

question 2

Multiple Choice

According to the empirical evidence, which of the following statements about capital structure is true?

• A)Most firms tend to target a capital structure that is 40% debt and 60% equity.
• B)Most of the changes in capital structure is the result of an attempt to time the market by management.
• C)Slightly less than half of the changes in the capital structures of publicly traded, U.S. firms can be explained by changes in the value of their stock.
• D)Managers typically target an optimal capital structure and react relatively quickly to adjust their firm's capital structure if market forces change it.

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