This Is a Theory That Managers Prefer to Use Additions

question 154

Multiple Choice

This is a theory that managers prefer to use additions to retained earnings to finance the firm, then debt, and as a final resort, new equity.

• A) Rational decision maker hypothesis
• B) Static trade-off hypothesis
• C) Pecking order hypothesis
• D) Market timing hypothesis

---

Definitions:

Enforcement Mechanism

Procedures or methods used to ensure compliance with laws, regulations, or agreements, often involving legal or administrative actions.

Safety Inspections

The examination of facilities, equipment, or processes to ensure they comply with safety standards and regulations, aiming to prevent accidents and injuries.

Health Inspectors

Officials responsible for ensuring compliance with public health regulations and standards, especially in food establishments, housing, and workplaces.

Closed Shop

A labor arrangement whereby all employees must be members of a specific union before being hired, typically agreed upon through union and employer negotiations.