Which of the Following Statements Is CORRECT

question 93

Multiple Choice

Which of the following statements is CORRECT?

• A) The capital structure that maximizes the stock price is also the capital structure that maximizes earnings per share.
• B) The capital structure that maximizes the stock price is also the capital structure that maximizes the firm's times interest earned (TIE) ratio.
• C) Increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing; however, this still may raise the company's WACC.
• D) If Congress were to pass legislation that increases the personal tax rate but decreases the corporate tax rate, this would encourage companies to increase their debt ratios.
• E) The capital structure that maximizes the stock price is also the capital structure that minimizes the weighted average cost of capital (WACC).

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Definitions:

Saint Pantaleimon

A Christian martyr and saint, venerated in the Eastern Orthodox, Catholic, and other Christian churches, known for his healing and miracles.

Emotionally Charged

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Madonna

A title for Mary, mother of Jesus, often used in the context of Christian art depicting her.

Vladimir Virgin

Refers to an iconic representation of the Virgin Mary in Eastern Orthodox Christianity, characterized by a specific style of iconography originating from Russia.