In Order to Show That Capital Structure Is Irrelevant, We

question 37

Multiple Choice

In order to show that capital structure is irrelevant, we need which of the following assumptions?

• A)Perfect markets
• B)No taxes
• C)Risk-free debt
• D)All of the above are critical.

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Definitions:

Bearer Instrument

A bearer instrument is a type of document that allows the holder to claim the rights or assets it represents without endorsing or proving ownership.

Order Instrument

A financial document that is payable to a specified person or entity, such as a check, which requires endorsement for cashing or deposit.

Endorsed

Officially approved or supported, or signed on the back to transfer ownership or to show agreement.

Negotiability

The feature of a financial instrument that allows it to be transferred or assigned from one party to another in a manner that the transferee obtains a good title.