How does the capital structure affect value of shareholder

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Problem 1: Good Song company is a listed company in Hong Kong. The company is currently manufacturing piano in Shenzhen of China and exporting the product to Europe in 2020. You are newly employed as a financial manager of the company. The CEO, Gilbert Chan asked you one day morning, "Is there a rule for finding an optimal capital structure of a firm? Why? How does the capital structure affect the value of shareholder wealth and risk of shareholder? Besides, under the current macro environment, what factors we need to consider in developing the capital structure policy of the firm and how these factors affect." Response to CEO questions. Illustrate your answers with example(s).

Reference no: EM132805776

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