Question
Which of the following statements regarding the capital structure is CORRECT? Group of answer choices A. According to the M&M theory under perfect market assumptions,
Which of the following statements regarding the capital structure is CORRECT?
Group of answer choices
A. According to the M&M theory under perfect market assumptions, the value of a firm with no debt is less than that with 100% debt.
B. A firm's optimal capital structure is one that maximizes both its expected EPS and stock price.
C. According to the M&M theory, if only corporate taxes are considered, the optimal capital structure is one with 100% debt financing.
D. According to the static tradeoff model, a firm's optimal capital structure can be obtained by considering the debt-related costs only.
E. The pecking order model predicts that the equity financing is more preferred to debt financing.
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