What Is Optimal Capital Structure

question 39

Multiple Choice

What is optimal capital structure?

• A)It is the mix of debt, preferred stock and common equity that maximizes profits.
• B)It is the mix of debt, preferred stock and common equity that minimizes risk.
• C)It is the mix of debt, preferred stock and common equity that minimizes the weighted cost of the firm's employed capital.
• D)It is the mix of common and preferred stock that maximizes dividends to the stockholders.

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Definitions:

Fiscal Policy

A government's use of spending and taxation to influence the economy.

Money Supply

The total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.

National Debt

describes the total amount of money that a country's government has borrowed and not yet repaid.

Fiscal Policy

Government policy regarding taxation and spending to influence the economy.