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Questions and Answers
What is the main focus of the EBIT-EPS approach to capital structure?
What is the main focus of the EBIT-EPS approach to capital structure?
- Balancing operating and financial leverage
- Optimizing the capital structure
- Minimizing the cost of capital
- Maximizing earnings per share (correct)
What is the primary concern of the zero-growth valuation model in determining optimal capital structure?
What is the primary concern of the zero-growth valuation model in determining optimal capital structure?
- Operating leverage
- Financial leverage
- Market value of the firm (correct)
- Cost of capital
What does total leverage encompass?
What does total leverage encompass?
- Operating and financial leverage (correct)
- Debt and equity financing
- Capital structure and cost of capital
- Long-term and short-term debt
What does the external assessment of capital structure primarily involve?
What does the external assessment of capital structure primarily involve?
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In capital structure theory, what is the focus of non-U.S. firms' capital structure?
In capital structure theory, what is the focus of non-U.S. firms' capital structure?
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