Which of the Following Statements Best Describes the Optimal Capital

question 69

Multiple Choice

Which of the following statements best describes the optimal capital structure?

• A) The optimal capital structure is the mix of debt,equity,and preferred stock that maximizes the company's earnings per share (EPS).
• B) The optimal capital structure is the mix of debt,equity,and preferred stock that maximizes the company's stock price.
• C) The optimal capital structure is the mix of debt,equity,and preferred stock that minimizes the company's cost of equity.
• D) The optimal capital structure is the mix of debt,equity,and preferred stock that minimizes the company's cost of debt.
• E) The optimal capital structure is the mix of debt,equity,and preferred stock that minimizes the company's cost of preferred stock.

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Definitions:

Easy Money Policy

A monetary policy that increases the money supply and lowers interest rates, aimed at stimulating economic growth.

Dollar

A unit of currency used in the United States and some other countries, symbolized by "$".

American Net Exports

The value of exports from the United States minus the value of its imports, expressing the country's trade balance with rest of the world.

Federal Reserve

The central banking system of the United States, responsible for implementing monetary policy, supervising banks, and ensuring financial stability.