Which of the Following Is Accepted Wisdom Regarding the Optimal

question 85

Multiple Choice

Which of the following is accepted wisdom regarding the optimal capital structure?

• A)For most firms, the optimal capital structure is somewhere between 30% and 50% debt.
• B)A firm with good profit prospects and little to no debt is probably missing an opportunity by not using borrowed money if interest rates are reasonable.
• C)Debt levels above 60% create excessive risk and should be avoided.
• D)All of the above

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Definitions:

Reaction

A process in which substances interact, leading to the formation of new substances.

Steps

A sequence of actions or methodical process to accomplish an end.

Organic Product

A compound or substance that contains carbon atoms bonded to hydrogen or other elements, primarily produced by living organisms but also synthesized in laboratories.

Reaction

A process in which substances interact to form new substances with different properties.