The Optimal Capital Structure Will Tend to Include More Debt

question 7

Multiple Choice

The optimal capital structure will tend to include more debt for firms with:

• A) the highest depreciation deductions.
• B) the lowest marginal tax rate.
• C) substantial tax shields from other sources.
• D) lower probability of financial distress.
• E) less taxable incomE.

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Definitions:

Quorum

The smallest number of participants needed in a meeting to validate its proceedings.

Shareholders' Meeting

An official gathering of the shareholders of a company to discuss the company's affairs, make decisions, and vote on corporate issues.

Cumulative Voting

A voting system used in corporate elections that allows shareholders to accumulate their votes and allocate them to one or several candidates, enhancing minority shareholders' chances of representation.

Revised Act

Refers to an updated or amended legislative act or statute.