The mix of debt, preferred stock, and common equity that minimizes the weighted cost of capital to the firm is known as the ____.
A) optimal corporate structure
B) target financial structure
C) optimal capital structure
D) optimal degree of combined leverage

Question

Quizplus · Accepted Answer

The term "optimal capital structure" refers to the mix of debt, preferred stock, and common equity that minimizes the weighted cost of capital to the firm. This means that the firm can borrow at the lowest possible cost and maximize shareholder value. The other options may be related to corporate finance, but they do not directly refer to the specific concept of optimal capital structure.

The Mix of Debt, Preferred Stock, and Common Equity That