The capital structure chosen by a firm doesn't really matter because of:
A) taxes.
B) the interest tax shield.
C) the relationship between dividends and earnings per share.
D) the effects of leverage on the cost of equity.
E) homemade leveragE.

Question

Quizplus · Accepted Answer

Homemade leverage implies that investors can create their own leverage by borrowing or lending on their own, making the firm's capital structure irrelevant under certain conditions, as per the Modigliani-Miller theorem.

The Capital Structure Chosen by a Firm Doesn't Really Matter