A Firm's Optimal Capital Structure

question 25

Multiple Choice

A firm's optimal capital structure:

• A)is the debt-equity ratio that results in the lowest possible weighted average cost of capital
• B)exists when the debt-equity ratio is 0.50
• C)is found by locating the mix of debt and equity which causes the earnings per share to equal exactly $1
• D)is the debt-equity ratio that exists at the point where the firm's weighted after-tax cost of debt is minimised
• E)is generally a mix of 40 per cent debt and 60 per cent equity

---

Definitions:

Customer Death

A situation in which a business must address the death of a client, often involving the handling of accounts, services, or ongoing transactions.

Cashier's Check

A check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier or teller.

Stolen Check

A check that has been taken unlawfully from its rightful owner, potentially leading to unauthorized transactions.

Bank Notification

A message or alert sent by a bank to inform its customers of specific account activities or changes.