The manager of a firm should change the capital structure if and only if Blank______.Multiple choice question.it benefits managementthe value of the debt exceeds the value of the equitythe change will increase the value of the firmthe change will decrease the value of the firm

Select all that applyUnder the MM propositions with no taxes, managers cannot change the value of the firm by repackaging its securities because Blank______.Multiple select question.as debt is added, the equity becomes more riskycapital structures are fixedthe overall cost of capital cannot be reduceddebt is not cheaper than equity

Firm value initially increases when the proportion of debt in the capital structure increases due to the Blank______.Multiple choice question.lower dividend paymentsdebt tax shieldhigher dividend paymentslower interest expenses

Which of the following statements about capital structure are correct? Select ALL correct answers.A company should always finance its business using as much debt as possible in order to optimize the capital structure.Having too little debt may increase the risk of default in repayment.A company needs to consider the current economic climate when making decisions on debt and equity proportions.Having too much equity may dilute earnings and the value of the original investors.

With no taxes, MM showed Blank______.Multiple choice question.capital structure is importantcapital structure does not mattermore debt increases valuedebt financing is worse than equity financing

Which of these statements is true regarding corporate capital structures?Multiple choice question.The capital structure that maximizes the value of the firm provides the most benefit for its stockholders.The optimal capital structure results in a lower stock price and a higher cost of capital.The best capital structure is always the all-equity option.