In General,the Capital Structures Used by U.S.firms

question 93

Multiple Choice

In general,the capital structures used by U.S.firms:

• A)tend to overweigh debt in relation to equity.
• B)generally result in debt-equity ratios between 0.45 and 0.60.
• C)are fairly standard for all SIC codes.
• D)tend to be those which maximize the use of the firm's available tax shelters.
• E)vary significantly across industries.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Demand Curves

Visual diagrams that illustrate the connection between a product's price and the amount consumers are willing to buy.

MC = MR

An economic principle that firms reach the optimal level of production when marginal cost equals marginal revenue.

Downward-Sloping

Describes a curve or line on a graph that shows a decrease in a variable (e.g., price) leading to an increase in another variable (e.g., quantity demanded), typically observed in demand curves.