The capital structure chosen by a ﬁrm doesn't really matter because of:
A) Taxes.
B) The interest tax shield.
C) The relationship between dividends and earnings per share.
D) The effects of leverage on the cost of equity.
E) Homemade leverage.

Question

Quizplus · Accepted Answer

Homemade leverage suggests that investors can create their own leverage by borrowing or lending on their own, making the firm's capital structure irrelevant.

The Capital Structure Chosen by a ﬁRm Doesn't Really Matter