The Pecking Order Theory of Capital Structure Suggests That Firms

question 2

Multiple Choice

The pecking order theory of capital structure suggests that firms follow which order when raising capital?

• A)Internal cash flow, issue debt, issue equity
• B)Internal cash flow, issue equity, issue debt
• C)Issue debt, internal cash flow, issue equity
• D)Issue debt, issue equity, internal cash flow

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Definitions:

Assignment

The transfer of a right, property, or debt from one party to another, including contractual rights or obligations.

Contract

An agreement between two or more entities that holds legal validity and can be enforced in a court of law.

Restrictive Covenant

A clause in a deed or lease that limits how the property can be used, often to maintain the value or character of the land.

Rental Revenue

Income derived from leasing properties or assets to tenants, including residential, commercial, or industrial spaces.