As a General Rule, the Optimal Capital Structure

question 105

Multiple Choice

As a general rule, the optimal capital structure

• A) maximizes expected EPS and also maximizes the price per share of common stock.
• B) minimizes the interest rate on debt and also maximizes the expected EPS.
• C) minimizes the required rate on equity and also maximizes the stock price.
• D) maximizes the price per share of common stock and also minimizes the weighted average cost of capital.

---

Definitions:

Mathematical Relationship

A connection between two or more variables or quantities, often expressed using equations or formulas.

pH

A scale used to specify the acidity or basicity of an aqueous solution, ranging from 0 (acidic) to 14 (basic).

Buffer Solution

A solution that can resist changes in pH when small quantities of an acid or base are added, maintaining a relatively constant pH.

pH

A measurement system that identifies whether an aqueous solution is acidic or alkaline, with values extending from 0 (indicative of acidity) to 14 (signifying basicity).