Optimal Capital Structure Is

question 125

Multiple Choice

Optimal capital structure is

• A) the mix of permanent sources of funds used by the firm in a manner that will maximize the company's common stock price.
• B) the mix of all items that appear on the right-hand side of the company's balance sheet.
• C) the mix of funds that will minimize the firm's cost of equity capital.
• D) the mix of funds that will maximize the firm's interest tax shield.

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Definitions:

Collection Float

The time period between when a check is deposited into a bank account and the time the funds are available to the depositor.

Mailing Time

The duration it takes for correspondence to be delivered from the sender to the recipient.

Collection Float

The time period between when a check is deposited and when the funds become available in the recipient's account.

Net Float

Net float is the difference between the amount of checks written by a company and the amount that has been cleared and charged to the company's account, affecting its available balance.