In the Absence of Taxes,the Capital Structure Chosen by a Firm

question 53

Multiple Choice

In the absence of taxes,the capital structure chosen by a firm doesn't really matter because of:

• A)taxes.
• B)the interest tax shield.
• C)the relationship between dividends and earnings per share.
• D)the effects of leverage on the cost of equity.
• E)homemade leverage.

---

Definitions:

Cultural Values

The core principles and ideals shared by a group or society that influence behaviors and decision-making.

Moral Values

Fundamental beliefs regarding what is right, ethical, or virtuous, guiding individual or societal behavior.

Fairness

The practice of making judgments that are just, unbiased, and impartial.

Social Norms

Social Norms are the accepted behaviors, rules, or standards within a society or group, guiding members’ actions and expectations of others.