According to the trade-off theory of capital structure:
A. optimal capital structure is reached when the present value of tax savings on account of additional borrowing is just offset by increases in the present value of costs of distress.
B. optimal capital structure is reached when stockholders' right to default is balanced by the the bondholders' right to get interest and principal payments.
C.optimal capital structure is reached when the benefits of limited liability is just offset by the value of the lawyers' claim.
D. none of the above