Which of the Following Statements Is CORRECT

question 60

Multiple Choice

Which of the following statements is CORRECT?

• A) The capital structure that maximizes expected EPS also maximizes the price per share of common stock.
• B) The capital structure that minimizes the interest rate on debt also maximizes the expected EPS.
• C) The capital structure that minimizes the required return on equity also maximizes the stock price.
• D) The capital structure that minimizes the WACC also maximizes the price per share of common stock.
• E) The capital structure that gives the firm the best bond rating also maximizes the stock price.

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Definitions:

Bank

A financial institution licensed to receive deposits, offer loans, and provide other financial services such as currency exchange and wealth management.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a designated person.

Ammeter

An instrument used to measure the current in a circuit, expressed in amperes.

Current Flow

The movement of electric charge carriers, such as electrons, through a conductor or space.