Firms often have suboptimal capital structures because
A) their managers do not understand the theory of optimal capital structure.
B) some business owners think their firm will never become insolvent.
C) firms are affected differently by bankruptcy and agency costs.
D) some firms do not pay taxes.
E) operating leverage is more important than financial leverage in some firms.

Question

Quizplus · Accepted Answer

The balance of costs and benefits varies from company to company, and so will the optimal capital structure.

Firms Often Have Suboptimal Capital Structures Because