________ is the point at which the equity value of the firm is zero.
A)The optimal capital structure
B)Bankruptcy
C)The optimal tax structure
D)None of the above

Question

Quizplus · Accepted Answer

The point at which the equity value of the firm is zero is called bankruptcy. At this point, the liabilities of the firm exceed the total assets, resulting in a negative net worth or equity. Therefore, option B is the correct answer. Options A and C are incorrect as they are referring to the concepts of optimal capital structure and optimal tax structure, respectively, which are different from the point of bankruptcy. Option D is incorrect as it does not provide any relevant answer.

________ Is the Point at Which the Equity Value of the Firm