Which of the Following Statements Is Correct

question 44

Multiple Choice

Which of the following statements is correct?

• A)A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.
• B)The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock price.
• C)The capital structure that minimizes the firm's weighted average cost of capital is also the capital structure that maximizes its earnings per share.
• D)If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.

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Definitions:

For Loop

A control flow statement for specifying iteration, allowing code to be executed repeatedly based on a given boolean condition.

Initialize

The process of assigning an initial value to a variable or data structure.

Array Indexed Variables

Variables in an array that are accessed using their index positions within the array.

Arguments

Values or variables passed to a function, procedure, or command that influence its execution or operation.