(DEBT CAPACITY/DEBT COLLATERAL/ DEBT CHARCTERISTIC)

(DECREASE/INCREASE)

(MORE/LESS)

(CONCERVATIE/AGRESSIVE)

2. The target capital structure bring about this target and/or optimal structure will have consequences for the firm's performance and characteristics, including its riskiness, profitability, and even its visibility in the financial markets. When discussing the amount of debt financing employed in a firm's optimal capital structure, it is customary to refer to it as the company's Using more debt will the risk borne by stockholders. As a firm's tax rate decreases, it becomes advantageous for the firm to take on additional debt. manager would be more likely to use debt in an effort to boost his firm's profits