The Trade-Off Theory of Capital Structure Describes the Optimal Capital

question 59

Multiple Choice

The trade-off theory of capital structure describes the optimal capital structure for any firm as being the level of debt that:

• A) minimizes the financial distress costs.
• B) maximizes the present value of the interest tax shield.
• C) equates the present values of the interest tax shield and the financial distress costs.
• D)maximizes the after-tax cash flows that are internally generated.

---

Definitions:

Interpersonal

Relating to relationships or communication between people.

Intellectual Competencies

The cognitive skills and abilities essential for the complex problem solving and critical thinking required in nursing practice.

Socialization Skills

The abilities and competencies used to interact and communicate effectively with others in various social contexts.

Professional Expertise

The specialized knowledge, skills, and judgement that professionals, such as nurses, possess and continuously develop through education and experience.