According to the Trade-Off Theory,optimal Capital Structure Occurs When

question 73

Multiple Choice

According to the trade-off theory,optimal capital structure occurs when:

• A) additional borrowing results in lower financial distress costs.
• B) additional borrowing is offset by the interest tax shield.
• C) the tax savings from additional leverage are offset by the increased costs of distress.
• D) the present value of the tax shield exceeds the value of the all-equity-financed firm.

---

Definitions:

Supervisor Support

The guidance and assistance offered by supervisors to their employees, crucial for workplace motivation and achieving task objectives.

Social Support System

A network of family, friends, colleagues, and other individuals that provides emotional, informational, and practical assistance.

Old Habits

Established patterns of behavior that are repeated regularly and tend to occur subconsciously, often hard to change due to their deep-rooted nature in one's routine or personality.

Reward System

Mechanisms or programs designed to recognize and reward individuals for their performance and achievements, often used to motivate and retain employees.