All of the Following Statements Are Correct Except

question 65

Multiple Choice

All of the following statements are correct except:

• A) The pecking order hypothesis is a theory that states managers prefer to use new debt to finance the firm, then retained earnings, and (as a final resort) new equity.
• B) The market timing hypothesis states that firms try to time the equity market by issuing stock when their stock prices are high and repurchasing shares when stock values are low.
• C) The static tradeoff hypothesis states that firms will balance the advantages of debt (its lower cost and tax-deductibility of interest) with its disadvantages (greater possibility of bankruptcy and the value of explicit and implicit bankruptcy costs).
• D) Agency costs reduce the optimal level of debt financing for a firm below the level that would be appropriate if agency costs were zero.

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Definitions:

Collecting Duct

A tube in the kidney that receives filtrate from several nephrons and conducts it to the renal pelvis.

Directly Reabsorb

A process in which substances are taken back into the blood from the filtrate in the kidney tubules without undergoing any transformation.

Nephron

The functional, microscopic unit of the vertebrate kidney.

Peritubular Capillaries

In the mammalian kidney, a capillary network that surrounds each renal tubule; receives blood from the efferent arterioles.