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

question 19

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 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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