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NEW QUESTION: 1
As a general rule, the capital structure that
A. Minimizes the required rate on equity also maximizes the stock price.
B. Maximizes the price per share of common stock also minimizes the weighted average cost of capital.
C. Maximizes expected EPS also maximize the price per share of common stock.
D. None of these are correct.
E. Minimizes the interest rate on debt also maximizes the expected EPS.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
The optimal capital structure is the one that maximizes the price of the firm's stock, and this generally calls for a debt ratio which is lower than the one that maximizes expected EPS.
NEW QUESTION: 2
A. Option D
B. Option C
C. Option E
D. Option B
E. Option A
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