Which of the Following Is True About the Pecking Order

question 33

Multiple Choice

Which of the following is true about the pecking order theory?

• A)Management will raise equity when the shares are overpriced on the market.
• B)Management will raise debt finance before using excess retained earnings.
• C)Management will raise equity when the shares are underpriced on the market.
• D)None of the above

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Definitions:

Dissenters' Rights

Legal provisions that allow shareholders to object to certain corporate actions, typically offering them a right to receive payment for their shares.

National Securities Exchange

A securities exchange registered with the SEC, adhering to governmental standards and regulations for trading securities.

Substantially All

A term used in legal and finance contexts to indicate a majority or near-total portion of an asset, company's assets, or activity.

Approved

Officially accepted or sanctioned by an authoritative body, indicating compliance with specified requirements or standards.