The Firm's Target Capital Structure Is Consistent with Which of the Following

question 40

Multiple Choice

The firm's target capital structure is consistent with which of the following?

• A) Maximum earnings per share.
• B) Minimum cost of debt (r_d).
• C) Minimum risk.
• D) Minimum cost of equity (r_s).
• E) Minimum weighted average cost of capital.

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Definitions:

Block Transactions

Large-scale securities trades on stock markets, usually involving at least 10,000 shares or bonds.

NYSE

The New York Stock Exchange, one of the world's largest stock exchanges by market capitalization, located in New York City.

Stop-buy Order

A trading instruction used to purchase a security when it reaches a price above its current market price, typically to limit a loss on a short sale.

Short Sellers

Investors who borrow shares of a stock they expect to decrease in value, sell them, and then plan to buy them back at a lower price to return to the lender, profiting from the decline.