The Trade-Off Theory of Capital Structure Predicts That

question 34

Multiple Choice

The trade-off theory of capital structure predicts that

• A)unprofitable firms should borrow more than profitable ones.
• B)safe firms should borrow more than risky ones.
• C)rapidly growing firms should borrow more than mature firms.
• D)increasing leverage increases firm value, especially at high debt ratios.

---

Definitions:

Positive Symptoms

In psychiatry, symptoms that represent an excess or distortion of normal functions, such as hallucinations or delusions, particularly in the context of conditions like schizophrenia.

Acute

Describes something that is severe and sudden in onset, such as an acute illness, which contrasts with chronic conditions that develop gradually and persist over a long period of time.

Chronic

Describing a condition or disease persisting for a long time or constantly recurring, often referring to health issues.

Affect

A term used in psychology to describe the experience of feeling or emotion.