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

Question

Quizplus · Accepted Answer

The optimal capital structure depends on market imperfections such as taxes, distress costs and agency costs. These factors can affect a firm's cost of capital and value, and therefore determine the optimal mix of debt and equity financing. Capital market factors, firm specific risks and systematic risks can also impact a firm's financial structure, but they are not the primary determinants of optimal capital structure.

The Optimal Capital Structure Depends on ________ Such as Taxes