Which of the following statements best describes the optimal capital structure? The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's ____.
A) stock price.
B) cost of equity.
C) cost of debt.
D) cost of preferred stock.
E) earnings per share (eps).

Question

Quizplus · Accepted Answer

The optimal capital structure is the one that maximizes the company's stock price, which in turn maximizes the shareholder's wealth. While minimizing the cost of capital is a goal, the primary objective is to maximize the value of the firm, which is reflected in the stock price.

Which of the Following Statements Best Describes the Optimal Capital