Which of the Following Statements Is CORRECT

question 22

Multiple Choice

Which of the following statements is CORRECT?

• A) the capital structure that maximizes the stock price is also the capital structure that maximizes earnings per share.
• B) the capital structure that maximizes the stock price is also the capital structure that maximizes the firm's times interest earned (tie) ratio.
• C) increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this still may raise the company's wacc.
• D) if congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage companies to increase their debt ratios.
• E) the capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (wacc).

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Definitions:

Syntax

The set of rules, principles, and processes that govern the structure of sentences in any given language, including word order.

Syntactic Structure

relates to the arrangement of words and phrases to create well-formed sentences in a language.

Semantics

The branch of linguistics concerned with the meanings of words and language, including how meaning is structured and understood.

Comprehension

The ability to understand and make sense of text, speech, or any form of communication, capturing its meaning and implications.