Please read the question below and then provide your response in your reply. Your response must meet the following criteria. Quality of Post: Fully answers the question(s): Post is substantive and shows a deep level of understanding of the concepts; Post synthesizes, applies, and/or integrates concepts effectively.

Connections to Content: Post includes obvious and direct connections to competency content; May include direct/indirect quotes and references the content from the competency.

Originality: Post is original and demonstrates an independent thought process that is creative and individualized. Post adds value by raising novel points or providing new perspectives.

Writing Mechanics: Post is concise and clearly written in an academic tone; Sentences are complete; spelling, grammar and punctuation are correct.

Question 1: The optimal capital structure is governed by a variety of factors, including taxes and the costs of financial distress. Compare and contrast the capital structure of JP Morgan Chase with one other non-banking member of the Dow Jones Industrial Average (DJIA) usingat least fivedifferent factors described in the images. ex) Types of factors to consider: -Institutional and legal environments -Financial markets and banking sector -Macroeconomic factors

-Country-Specific Factors

For the question 1, I think it's a good idea to cite information from the following online articles. http://www.investopedia.com/walkthrough/corporate-finance/5/capital-structure/bankruptcy-optimal-structure.aspx http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/capital-structure-decision-factors.asp

Please let me give you an example. The capital structures of DJIA-listed companies Apple Inc. and JP Morgan Chase to better understand the many aspects that affect the ideal capital structure. While JP Morgan's capital structure is mostly debt-financed, Apple Inc.'s is primarily equity-financed. Legislation is crucial to capital structure because it mandates that banks follow stringent capital structure requirements. Due to Apple Inc.'s larger capitalization of debt and JP Morgan's higher net income, the latter company pays higher taxes. When you answer this question, please do not use Apple as a comparison to JP Morgan Chase. Choose the other DJIA-listed company. Please also add a table similar to the following:

JP Morgan Chase's case:	Apple's case
(in $ millions) December 31, 2019	(in $ millions) September 26, 2020
Deposits 1,562,431	Total current liabilities 105,392
Federal funds 183,675	Total non-current liabilities 153157
Short term borrowings 40,920	Total liabilities 258,549
Trading liabilities 119,277
Beneficial interests 17,841
Long term debt 291,498
Total liabilities 2,426,049
Equity	Equity
Preferred stock 26,993	Common stock 50779
Common stock 4,105	Retained earnings 14966
Additional paid-in capital 88,522	Accumulated other income -406
Retained earnings 223,211	Total equity 65,339
Accumulated other income 1569
Treasury stock 83,049
Total equity 261,330
Total liabilities and equity 2,687,379	Total liabilities and equity 323,888
For JP Morgan Chase: debt ratio = total debt/total assets = 2426049/2687379 =90.28%	For Apple debt ratio = total debt/total assets = 258549/323888 = 79.83%
Debt to equity ratio = total debt/total equity = 2426049/261330 = 9.28	Debt to equity ratio = total debt/total equity = 258549/65339 = 3.96

3. PRACTICAL ISSUES IN CAPITAL STRUCTURE POLICY Debt Ratings Factors to Consider Leverage in an International Setting \\ DEBT RATINGS . Companies consider debt ratings in making capital structure decisions because the cost of debt is affected by the rating. Bond Ratings by Moody's, Standard & Poor's, and Fitch Standard & Moody's Poor's Fitch Highest quality Aaa AAA AAA High quality Aa AA AA Upper medium grade A A A Investment grade Medium grade Baa BBB BBB Speculative Ba BB BB Highly speculative B B B Substantial risk Caa CCC CCC Extremely speculative Ca Speculative grade Possibly in default C Default D DDD-D . The spread between AAA rated and BBB rated bond yields is around 100 bps.EVALUATING CAPITAL STRUCTURE POLICY . Analysts consider a company's capital structure - Over time. - Compared with competitors with similar business risk. - Considering the company's corporate governance. . Analysts must also consider - The industry in which the company operates. - The regulatory environment. - The extent to which the company has tangible assets. - The degree of information asymmetry. - The need for financial flexibility.LEVERAGE IN AN INTERNATIONAL SETTING - Country-specic factors affect a company's choice of capital structure and the maturity structure within the capital structUIe. . Types of factors to consider: - Institutional and legal environments - Financial markets and banking sector - Macroeconomic factors COUNTRYSPECIFIC FACTORS Country-Specific Factors and Their Assumed Impacts on the Companies' Capital Structure then DIE and Debt Ratio is Maturity is Country-Sgecic Factor if a Country Potentially Potentially Institutional framework Legal system efficiency is more efcient Lower Longer Legal system origin has common law as Lower Longer opposed to civit law Information has auditors and analysts Lower Longer intermediaries Taxation has taxes that favor equity Lower COUNTRYSPECIFIC FACTORS Country-Specific Factors and Their Assumed Impacts on the Companies' Capital Structure then DIE and Debt Ratio is Maturity is Country-Sgecic Factor if a Country Potentially Potentially Institutional framework Legal system efficiency is more efcient Lower Longer Legal system origin has common law as Lower Longer opposed to civit law Information has auditors and analysts Lower Longer intermediaries Taxation has taxes that favor equity Lower