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:

Overgrazing

The depletion of vegetation due to continuous feeding by an excessive number of grazing animals, leading to land degradation.

Water Scarcity

A situation in which the available water resources are insufficient to meet the demands of a region.

Precipitation

Any form of water - liquid or solid - falling from the atmosphere to the Earth's surface, including rain, snow, sleet, and hail.

Evaporation

The process by which water transforms from a liquid to a gas or vapor state, often driven by heat from the sun, playing a critical role in the water cycle.