Asked by
Christine Jackson
on Dec 01, 2024Verified
Which of the following is a reason why calculating the capital structure based on market prices is considered tedious?
A) Accurate market prices can never be determined.
B) Dividend payout ratios on stocks are usually unpredictable.
C) The market-based structure is constantly changing.
D) The implied error in market-based structures is large.
Market Prices
The prevailing price for goods or services in a competitive marketplace, determined by supply and demand.
Capital Structure
The composition of a firm's financing through a mix of debt, equity, and other financial instruments, affecting its risk and valuation.
Dividend Payout Ratios
The fraction of earnings paid to shareholders in dividends, usually expressed as a percentage.
- Comprehend the significance of market values in preserving or attaining a company's capital structure.
Verified Answer
RE
Learning Objectives
- Comprehend the significance of market values in preserving or attaining a company's capital structure.