The Pecking Order Theory of Capital Structure Implies That

question 27

Multiple Choice

The pecking order theory of capital structure implies that:
I.high-risk firms will end up borrowing more;
II.firms prefer internal finance;
III.firms prefer debt to equity when external financing is required

• A)I only
• B)II only
• C)II and III only
• D)III only

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Definitions:

Improvements Needed

A phrase commonly used to indicate areas or aspects that require enhancements, optimizations, or corrections.

Strategic

Pertaining to the identification of long-term or overall aims and interests and the means of achieving them, often within organizational or national contexts.

Performance Management

A systematic process by which an organization involves its employees in improving effectiveness towards the achievement of the company's goals and objectives.

Business Objectives

The specific goals that an organization strives to achieve over a set period, guiding its operations and strategic direction.