According to the Signaling Theory of Capital Structure,firms First Use

question 29

True/False

According to the signaling theory of capital structure,firms first use common equity for their capital,then use debt if and only if they can raise no more equity on "reasonable" terms.This occurs because the use of debt financing signals to investors that the firm's managers think that the future does not look good.

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Definitions:

Dischargeable

Describes debts that can be eliminated through bankruptcy, releasing the debtor from personal liability for certain financial obligations.

Medical Expenses

Costs incurred from medical care, treatments, or procedures, often considered for financial accounting, insurance claims, or tax deductions.

Credit Card Debts

Financial obligations resulting from the use of a credit card to borrow money or purchase goods and services.

Discharged

A legal term used to describe a situation where an obligation or debt is terminated.