According to the static theory of capital structure, value-maximizing financial managers will borrow to the point where the firm's business risk is just equal to its financial risk.

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According to the static theory of capital structure, value-maximizing financial managers will borrow up to the point where the tax shield benefits from additional debt are exactly offset by the costs of financial distress. This optimal point does not necessarily equate the firm's business risk with its financial risk.

According to the Static Theory of Capital Structure, Value-Maximizing Financial