A general rule for managers to follow is to set the firm's capital structure such that the firm's:
A)size is maximized.
B)value is maximized.
C)bondholders are secured.
D)suppliers of raw materials are satisfied.
E)dividend payout is maximized.

Question

Quizplus · Accepted Answer

The main goal of capital structure decisions is to maximize the value of the firm, which is achieved by balancing the cost of debt and equity financing while minimizing the overall risk. Maximizing firm size, securing bondholders, satisfying suppliers, or maximizing dividend payout may be important secondary objectives, but they are not the primary goal of capital structure decisions.

A General Rule for Managers to Follow Is to Set