Managers should not change the capital structure unless it departs significantly from the optimal level because such a change would
A)reduce dividends.
B)change incentives of stakeholders.
C)incur transactions costs.
D)increase fixed costs.

Question

Quizplus · Accepted Answer

Changing the capital structure often involves transactions such as issuing new debt or equity, which incurs transaction costs.

Managers Should Not Change the Capital Structure Unless It Departs