The Optimal Capital Structure Is the Funds Mix That Will

question 122

Multiple Choice

The optimal capital structure is the funds mix that will

• A) minimize the use of debt.
• B) achieve an equal proportion of debt, preferred stock, and common equity.
• C) minimize the firm's composite cost of capital.
• D) maximize total leverage.

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Definitions:

Maturity Date

The specified date on which the final payment of a loan or financial instrument, such as a bond, is due and payable.

Notes Payable

Written promises to pay specified sums of money at future dates, categorized as liabilities.

Annual Interest

The amount of interest due over the course of a year on a loan or financial investment.

Merchandise

Goods bought and sold in business operations, often referred to as stock or inventory.