The optimal capital structure:
A) will be the same for all companies within the same industry.
B) will remain constant over time unless the company changes its primary operations.
C) will vary over time as taxes and market conditions change.
D) places more emphasis on operations than on financing.
E) is unaffected by changes in the financial markets.

Question

Quizplus · Accepted Answer

The optimal capital structure will vary over time as taxes and market conditions change. This means that companies need to regularly assess their capital structure and make adjustments as necessary to maintain an optimal level of debt and equity financing. Factors such as interest rates, tax laws, and market conditions can all impact the ideal mix of debt and equity for a particular company.

The Optimal Capital Structure