Capital structure of the firm can be defined as:
I. the firm's debt-equity ratio
II. the firm's mix of different securities used to finance assets
III. the market imperfection that the firm's manager can exploit
A) I only
B) II only
C) III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Capital structure is primarily related to the mix of different securities used to finance assets. While debt-equity ratio is one aspect of it, it's not the only defining factor. The market imperfections that the firm's manager may exploit is more related to the theory of capital structure, but not the definition of it.

Capital Structure of the Firm Can Be Defined As