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Which one of the following best describes the Traditional Approach to capital structure? ...

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Finance

  1. Which one of the following best describes the Traditional Approach to capital structure?

    A.

    Capital structure is irrelevant in determining a companys cost of capital

    B.

    Two companies which are identical in every way except for their gearing levels should have identical costs of capital
    C.

    An optimal capital structure for a company is 100% debt finance
    D.

    An optimal capital structure does exist for individual companies

    E.

    Companies prefer retained earnings to external funds and prefer new debt to new equity

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