The Optimal Capital Structure Has Been Achieved When The

question 73

Multiple Choice

The optimal capital structure has been achieved when the:

• A) debt-equity ratio is equal to 1.
• B) weight of equity is equal to the weight of debt.
• C) cost of equity is maximized given a pre-tax cost of debt.
• D) debt-equity ratio is such that the cost of debt exceeds the cost of equity.
• E) debt-equity ratio selected results in the lowest possible weighed average cost of capital.

---

Definitions:

Spatial Task

A task that involves understanding, perceiving, and manipulating objects and their relationships in space.

Placebo Effect

A beneficial effect produced by a placebo drug or treatment, which cannot be attributed to the properties of the placebo itself, and must therefore be due to the patient's belief in that treatment.

Halo Effect

A cognitive bias where the perception of one positive trait (like attractiveness) in a person influences the observer's judgment to also perceive other unrelated positive traits.

Placebo Control Group

A group in experimental research that receives a sham or inert treatment, used to compare against the real treatment's effects.