All of the Following Statements Are Correct Except

question 144

Multiple Choice

All of the following statements are correct except:

• A)The pecking order hypothesis is a theory that states managers prefer to use new debt to finance the firm,then retained earnings,and (as a final resort)new equity.
• B)The market timing hypothesis states that firms try to time the equity market by issuing stock when their stock prices are low and repurchasing shares when stock values are high.
• C)The static tradeoff hypothesis states that firms will balance the advantages of equity (its lower cost and tax-deductibility of interest)with its disadvantages (greater possibility of bankruptcy and the value of explicit and implicit bankruptcy costs).
• D)Agency costs increase the optimal level of debt financing for a firm above the level that would be appropriate if agency costs were zero.
• E)None of the above statements are correct.

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Definitions:

Tolerance

The capacity to accept or endure differences, opinions, or behavior without agreement or objection.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture.

Ethnocentrism

The belief in the superiority of one's own ethnic group or culture, often accompanied by a dismissal of other cultures.

Edward T. Hall

An American anthropologist known for his work in the field of intercultural communication and proxemics.