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  3. 3. in finance, we often hear the term 'optimal cap

3. In finance, we often hear the term 'optimal capital structure' used to describe the...

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3. In finance, we often hear the term 'optimal capital structure' used to describe the mix of financing which will result in the highest market value of a firm. However, to determine what this optimal capital structure is may not be an easy task. Discuss the factors below that must be considered in determining the optimal capital structure for a firm. (12points) a) Bankruptcy Risk b) Agency Concerns I c) Signaling Theory e) Pecking Order Theory

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