define optimal capital structure? illustrate with examples:
Answer Posted / abhishek
The best debt-to-equity ratio for a firm that maximizes its value. The optimal capital structure for a company is one which offers a balance between the ideal debt-to-equity range and minimizes the firm's cost of capital. In theory, debt financing generally offers the lowest cost of capital due to its tax deductibility. However, it is rarely the optimal structure since a company's risk generally increases as debt increases.
Read more: http://www.investopedia.com/terms/o/optimal-capital-structure.asp#ixzz1wjYPdYhW
Is This Answer Correct ? | 1 Yes | 0 No |
Post New Answer View All Answers
How can a company invite public deposits through advertisements?
What is 'overseas banking'?
AMONG LIFE INSURANCE, GENERAL INSURANCE & RISK MANAGEMENT, WHY DID YOU SPECIFICALLY CHOSE RISK MANAGEMENT/GENERAL INSURANCE/LIFE INSURANCE?
Explain what is the difference between equity financing and debt financing?
What are money-back policies?
How will your professional knowledge help in banking career?
What is your greatest concern about investment banking right now?
What is scc?
Explain what is cash equity?
What Are The Important Macroeconomic Indicators That Influence Stock Market?
Have you ever been advised by a fellow employee or supervisor to lie about a situation? How did you handle this ethical dilemma?
Explain liquidity group ratios.
How Much Does It Cost To File Bankruptcy?
What are the threats to internet security?
Define repo rate?