The Target Capital Structure of a Firm Is the Capital

question 12

Multiple Choice

The target capital structure of a firm is the capital structure that:

• A)minimizes the operating risk of the firm's assets.
• B)maximizes the tax shield created by debt.
• C)minimizes the default risk of long-term debt.
• D)maximizes the price of the firm's stock.
• E)maximizes the dividends paid to common stockholders.

---

Definitions:

UCC

stands for the Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Sufficient Electronic Record

An electronic document that contains all the necessary information to be legally recognized and enforceable.

Car Dealer

A business entity that sells new or used automobiles in a retail setting, typically operating under a dealership contract with an automaker or sales subsidiary.

Defaults

Failures to meet the legal obligations or conditions of a loan, contract, or agreement, often resulting in penalties or legal action.