Managers Should Not Change the Capital Structure Unless It Departs

question 87

Multiple Choice

Managers should not change the capital structure unless it departs significantly from the optimal level because such a change would ________.

• A) reduce dividends
• B) incur transactions costs
• C) increase fixed costs
• D) change incentives of stakeholders

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Definitions:

Purpose

An individual's sense of determination or intention, guiding actions and giving meaning to personal or professional life.

Dichotomous

Pertaining to or involving a division or contrast between two completely opposite groups or things.

Cultural Bias

The tendency of a culture to interpret and judge phenomena by standards inherent to its own culture.

Normed

Refers to the process of standardizing a test or assessment by administering it to a specific group and using the results as a reference for interpreting individual scores.