The Optimal Capital Structure Will Tend to Include More Debt

question 9

Multiple Choice

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

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

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Definitions:

Moral People

Individuals who act in ways that are considered ethically right and good, often guided by personal conscience and societal norms.

Rawls

A philosopher known for his theory of justice as fairness, emphasizing equal basic rights, equality of opportunity, and the prioritization of the least advantaged in society.

Traits

Characteristics or attributes that can be inherited or acquired, distinguishing one individual from another.

Basic Structure

A framework underlying the organization or system that defines its core and essential components.