The firm's optimal mix of debt and equity is called its
A) maximum wealth.
B) target capital structure.
C) optimal ratio.
D) maximum book value.

Question

Quizplus · Accepted Answer

The optimal mix of debt and equity that the firm should use is called its target capital structure. This refers to the proportion of debt and equity financing that will result in the lowest overall cost of capital for the firm, and maximize the value of the firm for its shareholders.

The Firm's Optimal Mix of Debt and Equity Is Called