By changing the mix of securities a firm uses for financing, the financial manager:
A)can increase the book value of the firm.
B)is changing the firm's capital structure.
C)can increase the market value of the firm.
D)is changing the firm's dividend policy.

Question

Quizplus · Accepted Answer

By changing the mix of securities a firm uses for financing, the financial manager is changing the firm's capital structure, which refers to the way a firm finances its operations through a combination of equity, debt, and hybrid securities. This can impact the firm's financial leverage, cost of capital, and overall risk profile. It does not necessarily impact the book value or market value of the firm, nor does it relate to the firm's dividend policy.

By Changing the Mix of Securities a Firm Uses for Financing