7. Do not change the firms capital structure unless it departs significantly from the optimal level. Actively
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7. Do not change the firm’s capital structure unless it departs significantly from the optimal level. Actively changing a firm’s capital structure (for example, by selling or repurchasing shares or bonds) entails transactions costs. Most changes to a firm’s debt-equity ratio are likely to occur passively, as the market value of the firm’s equity fluctuates with changes in the firm’s stock price.
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Fundamentals Of Corporate Finance
ISBN: 9781292018409
3rd Global Edition
Authors: Berk, Peter DeMarzo, Jarrad Harford
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