A Firm's Optimal Capital Structure Is the Combination of Debt

question 42

Multiple Choice

A firm's optimal capital structure is the combination of debt financing and equity financing that ______. 

• A)maximizes its expected earnings per share (EPS).
• B)simultaneously maximizes its EPS and minimizes its weighted average cost of capital (WACC).
• C)minimizes its cost of equity, which is a necessary condition for maximizing the firm's stock price.
• D)simultaneously minimizes its cost of debt, its cost of equity, and its WACC.
• E)maximizes its stock price.

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Definitions:

Wages For Nurses

The monetary compensation paid to nursing professionals for their services, which can vary based on factors like experience, location, and specialization.

Resource Price

The cost associated with acquiring materials or inputs needed for production, including labor, capital, and natural resources.

Equilibrium

A condition in the market where the balance between supply and demand is achieved, resulting in steady prices.

Human Capital

The economic value of the abilities, skills, knowledge, and experience possessed by an individual or population.