Managers Should Not Change the Capital Structure Unless It Departs

question 106

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.
• E)favour shareholders over debt holders.

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Definitions:

Daoists

Adherents of Daoism, a philosophical and religious tradition of Chinese origin that emphasizes living in harmony with the Dao, the fundamental nature of the world.

Interpersonal Relationships

Social connections or associations between two or more individuals, often based on emotional bonding or some form of interaction.

Reciprocal Obligations

Mutual duties or responsibilities that exist between individuals or entities in a relationship or social contract.

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