Which of the Following Statements Is CORRECT

question 70

Multiple Choice

Which of the following statements is CORRECT?

• A) the optimal capital structure simultaneously maximizes eps and minimizes the wacc.
• B) the optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.
• C) the optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the wacc.
• D) the optimal capital structure simultaneously maximizes stock price and minimizes the wacc.
• E) as a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected eps.

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Definitions:

Economic Decision

A choice made by individuals, businesses, or governments that involves the allocation of resources, considering the costs and benefits to optimize outcomes.

Surpluses and Shortages

Conditions where the quantity of a good or service exceeds or falls short of the quantity demanded at a given price.

Competitive Behavior

Actions taken by businesses aimed at gaining an advantage over rivals in the market, often through pricing, innovation, or marketing strategies.

Economic Choice

The decision made by individuals or organizations regarding the allocation of resources or the selection among alternate goods and services.