Which of the following statements best describes the optimal capital structure? The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's ____.
A) stock price.
B) cost of equity.
C) cost of debt.
D) cost of preferred stock.
E) earnings per share (EPS).

Question

Quizplus · Accepted Answer

The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's stock price. This is because the ultimate goal of any financial decision is to maximize the wealth of the shareholders, and the stock price is a key indicator of the company's overall value. While minimizing costs, such as the cost of equity, debt, or preferred stock, is important, the primary focus should be on maximizing shareholder wealth.

Which of the Following Statements Best Describes the Optimal Capital