A general rule for managers to follow is to establish a firm's capital structure such that the firm's
A)cost of equity is minimized.
B)bondholders are fully secured.
C)current market value is maximized.
D)dividend payout is maximized.
E)assets are minimized.

Question

Quizplus · Accepted Answer

A firm's capital structure should aim to maximize its current market value. This can be achieved through a balance of debt and equity financing that minimizes the overall cost of capital while also providing sufficient funds for investment. Bondholder security and dividend payouts are important considerations, but maximizing the firm's value should be the primary objective. Minimizing assets would not be beneficial as it would limit the firm's ability to generate profits.

A General Rule for Managers to Follow Is to Establish