The Optimal Debt-Equity Ratio Tends to

question 37

Multiple Choice

The optimal debt-equity ratio tends to

• A)remain constant when agency costs of equity are considered.
• B)support the all-debt capital structure.
• C)increase when agency costs of equity exist.
• D)be directly related to the costs of financial distress.
• E)decrease as the tax rate increases.

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Definitions:

Shape

The external form or appearance of an object or a molecule determined by its spatial arrangement.

D Orbitals

A type of atomic orbital with a characteristic clover shape, involved in bonding in elements beyond the first twenty.

Shape

In chemistry, this often refers to the geometric arrangement of atoms in molecules or the spatial form of a molecule.

Electron Orbital

A mathematical function that describes the wave-like behavior of either one electron or a pair of electrons in an atom.