The Firm's Optimal Capital Structure Is the Mix of Financing

question 19

Multiple Choice

The firm's optimal capital structure is the mix of financing sources that

• A)minimises the risk of financial distress.
• B)maximises after-tax earnings.
• C)maximises the total value of the firm's debt and equity.
• D)maximises favorable leverage.

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Definitions:

Intellectual Property

Legal rights given to individuals or organizations over creations of the mind, such as inventions, literary and artistic works, designs, and symbols.

Venture Capitalist

An investor who provides capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity, or an ownership stake.

Due Diligence

An investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records plus anything else deemed material.

Thalamus

A part of the brain that acts as a principal relay station for sensory information, directing it to appropriate areas of the brain for processing.