The Optimal Capital Structure Has Been Achieved When The

question 1

Multiple Choice

The optimal capital structure has been achieved when the:

• A) debt-equity ratio is equal to 1.
• B) weight of equity is equal to the weight of debt.
• C) cost of equity is maximized given a pre-tax cost of debt.
• D) debt-equity ratio selected results in the lowest possible weighed average cost of capital.

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Definitions:

Axon

A long, slender projection of a nerve cell, or neuron, that typically conducts electrical impulses away from the neuron's cell body.

Nucleus

A membrane-bound organelle found in eukaryotic cells that contains most of the cell's genetic material.

Cardiac Muscle

Specialized, involuntary muscle tissue found only in the heart, responsible for pumping blood throughout the body.

Smooth Muscle

A type of muscle found in the walls of internal organs, such as the stomach and intestines, that contracts involuntarily.