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Determine which statements about capital structure correct

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Question 1: Which of the following statements about capital structure are correct? Select ALL correct answers.

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Option 1: Having too little debt may increase the risk of default in repayment.

Option 2: Having too much equity may dilute earnings and the value of the original investors.

Option 3: A company should always finance its business using as much debt as possible in order to optimize the capital structure.

Option 4: A company needs to consider the current economic climate when making decisions on debt and equity proportions.

Reference no: EM132570903

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