Which of the Following Statements Is Correct

question 44

Multiple Choice

Which of the following statements is correct?

• A)A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.
• B)The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock price.
• C)The capital structure that minimizes the firm's weighted average cost of capital is also the capital structure that maximizes its earnings per share.
• D)If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder where people feel the need to check things repeatedly, perform certain routines repeatedly, or have certain thoughts repeatedly.

Impulsively

Acting without forethought or consideration of the consequences.

Autism Spectrum Disorder

A range of developmental disorders characterized by challenges with social skills, repetitive behaviors, speech, and nonverbal communication.

Diagnosis Increase

Refers to the rise in the number of cases identified or diagnosed, which may be due to better awareness, improved diagnostic methods, or an actual increase in incidence.