capital structure, instructors manual（资本结构,指导手册）.docVIP

Chapter 14 Capital Structure Decisions: The Basics ANSWERS TO END-OF-CHAPTER QUESTIONS 14-1 a. Capital structure is the manner in which a firm’s assets are financed; that is, the right-hand side of the balance sheet. Capital structure is normally expressed as the percentage of each type of capital used by the firm--debt, preferred stock, and common equity. Business risk is the risk inherent in the operations of the firm, prior to the financing decision. Thus, business risk is the uncertainty inherent in a total risk sense, future operating income, or earnings before interest and taxes (EB