General Studies · Capital Structure Decisions
In the context of the functional responsibilities of a financial manager, consider the following statements regarding capital structure determination: Statement 1: The decision regarding the appropriate mix of equity and debt is typically made once the total capital requirements, encompassing both fixed and working capital, have been estimated. Statement 2: The objective of capital structure determination is to identify a specific mix of equity and borrowed funds that simultaneously minimises the weighted average cost of capital (WACC) and maximises the value of the firm.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 1 is false, but Statement 2 is true.
- 2Statement 1 is true, but Statement 2 is false.
- 3Both statements are false.
- 4Both statements are true.✓
Correct answer
Both statements are true.
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