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Which of the following is true about a firm’s capital structure? Group of answer choices A...

Which of the following is true about a firm’s capital structure?

Group of answer choices

A firm’s current or actual capital structure can differ from its target (or desired) capital structure because issuing new debt and stock can be lumpy.

In general, it is better to use the weights in a firm’s Target Capital Structure rather than the weights based on its Balance Sheet Capital Structure when estimating its WACC.

A firm’s capital structure is a how a firm is financing its projects using investor supplied capital.

All of the above are correct.

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Answer #1

The correct answer is Option D. All of the above are correct.

For calculating WACC, a firm's target capital structure is considered if stated. Hence Option B is correct

Capital structure is defined as the mix of debt and equity to finance a project/company. Hence option C is correct

The desired capital structure is the goal of the company but it is not necessary that they may be operating at that structure. In case of issuing further capital, the firm may find it difficult to raise capital in the same ratio. Hence Option A is correct

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