Based Upon the "Trade-Off Theory" of Capital Structure, What Differences

question 62

Multiple Choice

Based upon the "trade-off theory" of capital structure, what differences might you expect in the capital structure of a food producer and a defence contractor?

• A)higher debt-equity ratio for food producer.
• B)higher debt-equity ratio for a defence contractor.
• C)neither firm should use debt in their structure.
• D)differences in capital structure will make no valuation differences in these firms.

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