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FIN 534 Week 8 Chapter 15 Solution
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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.
2. Which of the following statements is CORRECT?