The capital structure that: A) minimizes the required rate on equity maximizes the stock price. B) maximizes the stock price minimizes the weighted average cost of capital. C) maximizes expected EPS maximizes the price per share of common stock.
B
Your answer: A was incorrect. The correct answer was B) maximizes the stock price minimizes the weighted average cost of capital. At the optimal capital structure the firm will minimize the WACC, maximize the share price of the stock and maximize the value of the firm. damn DDM/FCFE/RI messing with my head :-
I am convinced that all schweser questions just suck