Which of the Following Statements Is True Regarding the Trade-Off

question 108

Multiple Choice

Which of the following statements is true regarding the trade-off theory:

• A)target debt ratios are similar among firms in the same industry.
• B)riskier firms tend to rely mostly on debt financing.
• C)riskier firms should have high target debt ratios.
• D)less risky firms ought to have a greater amount of debt financing.

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Definitions:

Latent Learning

Latent learning is the subconscious retention of information without reinforcement or immediate application, which becomes evident when a specific situation triggers it.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, which in turn affects the likelihood of that behavior being repeated.

Law Of Effect

A principle in psychology that suggests behaviors followed by favorable consequences become more likely, whereas behaviors followed by unfavorable consequences become less likely.

Thorndike

American psychologist famous for his work on learning theory that led to the development of operant conditioning within behaviorism.