Capital Structure Is Irrelevant If

question 36

Multiple Choice

Capital structure is irrelevant if
I.capital markets are efficient;
II.each investor can borrow/lend on the same terms as the firm;
III.there are no tax benefits to debt

• A)I only
• B)II only
• C)III only
• D)I, II, and III

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Definitions:

Optimal Location

The most favourable geographical position for a business or facility based on factors like cost, accessibility, and market demand.

Firms Locate

The process by which businesses decide where to establish their operations, influenced by factors such as market access, costs, regulations, and infrastructure.

Capital

Capital in a business context represents the financial assets needed for operations, such as funds in bank accounts, inventory, buildings, and machinery.

Growth Strategy

A plan devised by a business to increase its size and market share through measures such as market penetration, product expansion, and acquisitions.