As a General Rule,the Capital Structure That

question 41

Multiple Choice

As a general rule,the capital structure that

• A) Maximizes expected EPS also maximizes the price per share of common stock.
• B) Minimizes the interest rate on debt also maximizes the expected EPS.
• C) Minimizes the required rate on equity also maximizes the stock price.
• D) Maximizes the price per share of common stock also minimizes the weighted average cost of capital.
• E) None of the above.

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Definitions:

Stock Exchange

A marketplace where securities, such as stocks and bonds, are bought and sold.

Consideration

In contract law, it refers to something of value exchanged between parties as part of an agreement.

Legally Sufficient Value

A value, consideration, or benefit that is recognized by law as adequate to support a binding contract.

Preexisting Duty

An obligation or duty that already exists under a contract, and performing it, therefore, does not constitute consideration for a new promise.