Optimal capital structure "first" criteria suggests that flexibility should be ________ and that the best way to obtain that is with ________ levels of debt and ________ levels of equity.
A)high; high; low
B)low; low; high
C)high; low; high
D)low; high; low

Question

Quizplus · Accepted Answer

The optimal capital structure "first" criteria suggests that flexibility should be high and the best way to obtain that is with low levels of debt and high levels of equity. Option C satisfies both criteria, making it the best choice. Option A suggests high levels of debt, which goes against the second criterion, and option B suggests low levels of equity, which goes against the first criterion. Option D suggests high levels of equity, which also goes against the first criterion.

Optimal Capital Structure "First" Criteria Suggests That Flexibility Should Be