The optimal capital structure depends on ________ such as taxes,distress costs,and agency costs.
A)capital market factors
B)market imperfections
C)firm-specific risks
D)systematic risks
E)government regulations

Question

Quizplus · Accepted Answer

The optimal capital structure is influenced by market imperfections such as taxes, distress costs, and agency costs. These factors affect the cost of capital and the risk exposure of the firm, which in turn influences the optimal mix of debt and equity financing. Capital market factors, firm-specific risks, systematic risks, and government regulations can also play a role in determining the optimal capital structure, but they are not the primary drivers of the decision.

The Optimal Capital Structure Depends on ________ Such as Taxes,distress