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)value is maximized.
D)dividend payout is maximized.
E)assets are minimized.

Question

Quizplus · Accepted Answer

The ultimate goal of a manager is to maximize the value of the firm, and establishing a capital structure that achieves this objective is critical. While minimizing the cost of equity and maximizing dividend payout can be important considerations, they are not the primary goal. Similarly, while securing bondholders is important, it alone does not maximize firm value. Minimizing assets is not a desirable goal as it reduces the firm's ability to generate revenue and profitability.

A General Rule for Managers to Follow Is to Establish