Which Statement Best Describes Optimal Capital Structure

question 70

Multiple Choice

Which statement best describes optimal capital structure?

• A)As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.
• B)The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.
• C)The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.
• D)The optimal capital structure simultaneously maximizes common share price and minimizes the WACC.

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Definitions:

Exchange Rate

The value assigned to one currency when trading for another.

Units

A fundamental quantity used in mathematics and science to measure variables.

C$ Weakens

A situation in which the Canadian dollar decreases in value relative to other currencies.

US$ Per C$

The exchange rate that defines how much one Canadian dollar (C$) is worth in United States dollars (US$).