In general, observed capital structures:
A) Tend to overweigh debt in relation to equity.
B) Are easily explained in terms of earnings volatility.
C) Are easily explained by analyzing the types of assets owned by the various ﬁrms.
D) Tend to be those which maximize the use of the ﬁrm's available tax shelters.
E) Vary signiﬁcantly across industries.

Question

Quizplus · Accepted Answer

Capital structures can vary significantly across industries due to differences in the nature of assets, earnings volatility, and other factors specific to each industry. Factors such as the availability of collateral for debt financing, the depth of capital markets, and the stability of cash flows can also influence a firm's optimal capital structure.

In General, Observed Capital Structures