The firm's ________ is the mix of long-term debt and equity utilized by the firm, which may significantly affect its value by affecting return and risk.
A) dividend policy
B) capital budget
C) capital structure
D) working capital

Question

Quizplus · Accepted Answer

Capital structure refers to the financing mix of a company which includes long-term debt and equity. It affects the company's value by influencing the return and risk of investing in the company. Dividend policy refers to the decision of how much profit a company should distribute to its shareholders in the form of dividends. Capital budget refers to the plan of how a company will allocate its financial resources to various projects. Working capital refers to the resources required to fund day-to-day operations of a company. Therefore, the only choice that fits the given description is C) capital structure.

The Firm's ________ Is the Mix of Long-Term Debt and Equity