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.

---

Definitions:

Arousal Theory

A theory suggesting that people are motivated to maintain an optimal level of arousal, which can vary from high to low, to enhance their overall performance and well-being.

Optimum Level

The most favorable degree or condition for the maximum effectiveness or success of a function or activity.

Experience

The knowledge or practical wisdom gained from direct involvement in events or activities.

Feelings

Emotional responses or states that arise from one's circumstances, mood, or relationships with others.