Under the customary approach, firms strive to either maintain their present capital structure or achieve some target structure. Both the current and the target structures must be based on:

A) market values.
B) book values.
C) intrinsic values.
D) future values.

Question

Girlie Agagon Valdez · Accepted Answer

Final Answer : A, Explanation :  The customary approach is based on market values, as the primary goal of maintaining or achieving a target capital structure is to maximize shareholder wealth, which is determined by the market value of the firm's equity. Book values may not accurately reflect the true economic value of a firm's assets, and intrinsic or future values are difficult to estimate and not commonly used in capital structure decisions.

Under the customary approach, firms strive to either maintain their present capital structure or achieve some target structure. Both the current and the target structures must be based on:

A) market values.
B) book values.
C) intrinsic values.
D) future values.

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Learning Objectives

Related questions

Under the customary approach, firms strive to either maintain their present capital structure or achieve some target structure. Both the current and the target structures must be based on:A) market values.B) book values.C) intrinsic values.D) future values.

Definitions

Learning Objectives

Learning Objectives

Related questions

Under the customary approach, firms strive to either maintain their present capital structure or achieve some target structure. Both the current and the target structures must be based on:

A) market values.
B) book values.
C) intrinsic values.
D) future values.