The optimal capital structure of a firm _____ the marketed claims and _____ the nonmarketed claims against the cash flows of the firm.
A)minimizes; minimizes
B)maximizes; minimizes
C)minimizes; maximizes
D)maximizes; maximizes
E)equates; (leave blank)

Question

Quizplus · Accepted Answer

The optimal capital structure maximizes the value of marketed claims (like debt and equity) while minimizing the costs or value of nonmarketed claims (like taxes, bankruptcy costs).

The Optimal Capital Structure of a Firm _____ the Marketed