16. The optimal capital structure has been achieved when the: 1. debt-equity ratio is equal to 1. II. the value of the firm is maximized. III. shareholder value is maximized and WACC is also maximized. IV. debt-equity ratio results in the lowest possible weighted average cost of capital A.I and II B. II and III C. II and IV D.II, III and IV 17. Business risk is: A. the risk inherent in a company's operations. B. the same as financial risk. C. inversely related to the cost of equity. D. dependent upon a company's capital structure. I 18. The tradeoff (static) theory of capital structure advocates that the optimal capital structure for a company: A. remains fixed over time. B. is independent of the company's tax rate. C. is independent of the company's profits D. is achieved when marginal tax savings equals the marginal increased bankruptcy costs from the additional unit of debt