The point of leverage where a company's ROE is maximized is referred to as its optimal capital structure.

Question

Quizplus · Accepted Answer

This is true. The optimal capital structure refers to the combination of debt and equity that maximizes a company's return on equity (ROE) and minimizes its cost of capital. At this point, the company is achieving the highest possible level of profitability while maintaining an acceptable level of risk.

The Point of Leverage Where a Company's ROE Is Maximized