A Firm Should Always Be at a Single Optimum Debt-To-Equity

question 79

True/False

A firm should always be at a single optimum debt-to-equity ratio to minimize its cost of capital.

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Definitions:

Net Income

The amount of profit a company generates after accounting for all expenses, taxes, and costs.

Total Dividends

The sum of all dividend payments made by a company to its shareholders during a specific period.

Trading Securities

Financial instruments that are purchased by a company not for long-term investment but rather for the purpose of earning a return through short-term price fluctuations.

Fair Value

An estimate of the price at which an asset or liability would be traded in a fair transaction between willing parties.