Managers Should Not Change the Capital Structure Unless It Departs

question 94

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)change incentives of stakeholders.
• C)incur transactions costs.
• D)increase fixed costs.

---

Definitions:

Adjusted Gross Income (AGI)

A calculation derived from your total earnings to ascertain the taxable portion of your income.

Deductions and Credits

Financial tools allowed by tax law to reduce taxable income or the tax itself, with deductions lowering taxable income and credits directly reducing the tax payable.

Maximum Penalty

The highest possible financial charge or punishment that can be imposed for a violation of a rule or law.

Failure to File

The failure of an individual or business to submit their tax return by the due date, which can result in penalties and interest charges.