optimal capital structure

The explanation in the following question does not make A as right answer. Am I missing? Which of the following statements about a firm’s capital structure is least accurate? A) The firm’s optimal capital structure occurs where the firm’s earnings per share is maximized. B) The degree of total leverage equals the degree of operating leverage times the degree of financial leverage. C) Other things held constant, if you increase a firm’s financial leverage you will increase the firm’s beta coefficient. D) Asymmetric information involves a situation where the firm’s managers have better information about the firm’s prospects than the investors do. Your answer: C was incorrect. The correct answer was A) The firm’s optimal capital structure occurs where the firm’s earnings per share is maximized. The firm’s optimal capital structure occurs where the firm’s stock price or value is maximized and the WACC is minimized.

A = false, high EPS does not necessarily mean firm is using OCS, it’s the stock price and value of the firm that are maximized and the WACC that is minimized, as the result of using OCS B = correct =DTL = DOL*DFL C = correct = FL increases, risk increases D = correct = Asymmetricity is bad

Dinesh, Got it. thanks for reply