The amount of debt in a firm's optimal capital structure is often referred to as the firm's ____.
A) debt capacity
B) lending ability
C) line of credit
D) loan limit

Question

Quizplus · Accepted Answer

The term commonly used to refer to the amount of debt that should be included in a firm's capital structure is the "debt capacity." This refers to the amount of debt that a firm can take on while still maintaining a healthy financial position and a low risk of default. Choosing options B, C, or D can be incorrect as they do not represent the specific term for the amount of debt recognized in an optimal capital structure.

The Amount of Debt in a Firm's Optimal Capital Structure