Knowee
Questions
Features
Study Tools

Which factor is NOT considered when determining the optimum capital structure?a.Business riskb.Financial riskc.Market riskd.Political risk

Question

Which factor is NOT considered when determining the optimum capital structure?a.Business riskb.Financial riskc.Market riskd.Political risk

🧐 Not the exact question you are looking for?Go ask a question

Solution

The factor that is NOT considered when determining the optimum capital structure is d. Political risk.

The optimum capital structure is determined by considering factors that directly impact a company's finances and operations. These include:

a. Business risk: This refers to the risk associated with the company's operations. It can be influenced by a variety of factors, such as competition, market demand, and operational efficiency.

b. Financial risk: This is the risk associated with the company's financial obligations. It is primarily influenced by the company's debt levels and its ability to meet its financial obligations.

c. Market risk: This is the risk of a company's stocks or bonds losing value due to changes in the overall market. It is influenced by factors such as economic conditions, interest rates, and market sentiment.

On the other hand, political risk refers to the risk that a company's operations, profitability, or assets will be affected by political decisions or events. While this can certainly impact a company's overall risk profile, it is not typically a factor that is considered when determining a company's optimum capital structure.

This problem has been solved

Similar Questions

Factors determining the optimum capital structure include:a.Business risk and financial riskb.Market risk and liquidity riskc.Operational risk and credit riskd.Economic risk and political risk

Capital Structure is an optimal mix of which one of the following options

Capital structure ______________ financial structure

Which of the following approaches can be adopted to arrive at optimal capital structure?A.The adjusted present value approachB.All of the optionsC.The Life cycle approachD.The relative approac

Which of the following is an objective of the Capital Market?  A. Ensuring stability in the financial system  B. Promoting international trade  C. Providing short-term financing to businesses  D. Mobilizing long-term savings for investment

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.