The Optimal Debt-Equity Ratio Tends to

question 44

Multiple Choice

The optimal debt-equity ratio tends to

• A)remain constant when agency costs of equity are considered.
• B)support the all-debt capital structure.
• C)increase when agency costs of equity exist.
• D)be directly related to the costs of financial distress.
• E)decrease as the tax rate increases.

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Definitions:

Stay-at-home Fathers

Men who choose to remain at home to care for their children and manage household duties instead of working for pay outside the home.

Workplace

Refers to any location, environment, or setting where individuals engage in work-related activities or occupations.

Equilibrium Wage

is the wage rate at which the supply of labor equals the demand for labor in the labor market.

Demand for Labor

The total amount of labor that employers want to hire at various wage rates, during a certain period.