Which One of the Following Theories About Capital Structure Is

question 13

Multiple Choice

Which one of the following theories about capital structure is based on agency cost?

• A)M&M proposition I
• B)Homemade leverage
• C)Pecking order
• D)Static trade-off

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Definitions:

Split-Up

The splitting up of a company into two or more companies.

Companies

Legal entities formed of individuals, shareholders, or members, aimed at operating for profit.

Excess Return

The return on an investment that exceeds the risk-free rate or a comparative benchmark or index.