The Pecking-Order Theory Suggests That Less Profitable Firms Borrow More

question 95

Multiple Choice

The pecking-order theory suggests that less profitable firms borrow more because:

• A) equity issues are more expensive.
• B) leverage is preferred over raising funds internally.
• C) debt issues are good omens.
• D) they have insufficient internal funds.

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Definitions:

Individual Psychology

A psychological method or theory originating in the work of Alfred Adler, focusing on the unique motivations of individuals and the importance of each person's perceived niche in society.

Deinstitutionalization

The process of replacing long-stay psychiatric hospitals with less isolated community mental health services for those diagnosed with a mental disorder.

Psychoactive Drugs

Substances that alter brain function, resulting in temporary changes in perception, mood, consciousness, and behavior.

Maltreatment

The abuse or neglect of a person, often resulting in physical, emotional, or psychological harm.