- CFA Exams
- CFA Exam: Level II 2021
- Study Session 7. Corporate Finance (1)
- Reading 20. Capital Structure
- Subject 1. Capital structure irrelevance theory
CFA Practice Question
If capital markets are perfect and there are no taxes, the firm's choice of a capital structure
B. is totally inconsequential.
C. depends on the current interest.
A. is not very important.
B. is totally inconsequential.
C. depends on the current interest.
Correct Answer: B
In a world with perfect capital market and no taxes the capital structure decision is irrelevant.
User Contributed Comments 1
| User | Comment |
|---|---|
| setmefree | in a perfect capital market: symmetric information, no transation costs, investor borrows at same rate as corporation, |