The Pecking Order Theory Identifies Two Rules

question 52

Multiple Choice

The pecking order theory identifies two rules.The first rule is to

• A)issue convertible debt prior to straight debt to save funds.
• B)use short-term debt to its maximum available limit prior to issuing long-term debt.
• C)issue new equity first in order to retain internal funds and avoid interest costs.
• D)issue new debt prior to new equity.
• E)use internal financing prior to external financing.

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Definitions:

Producing New Ideas

The act of generating innovative concepts or solutions that have not been thought of before.

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A measure of how well an organization achieves its goals and objectives through efficient use of resources.

Competitiveness

denotes the characteristic of striving to be more successful or superior, especially in a commercial or professional context.

Productivity

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