CFA Level I sample question

CFA Level I Capital Structure question

Corporate Issuers / Capital Structure

No-login practice

Capital Structure sample question

Choose an answer before revealing the explanation, key takeaway, and answer-choice review.

Question 1 of 1Score 0/1

Very Difficult

Corporate Issuers

Capital Structure

Calloway Marine has increased leverage steadily for several years. Its CFO argues that because the after-tax cost of debt remains below the cost of equity, issuing additional debt to retire equity must keep lowering the company's WACC. According to static trade-off theory, this argument is most likely flawed because:

Report an issue

Question of the Week

Get one CFA Level I question by email

Receive a weekly practice question with answer-choice explanations and a short takeaway.