The Pecking-Order Theory Suggests That Less Profitable Firms Borrow More

question 95

Multiple Choice

The pecking-order theory suggests that less profitable firms borrow more because:

• A) equity issues are more expensive.
• B) leverage is preferred over raising funds internally.
• C) debt issues are good omens.
• D) they have insufficient internal funds.

---

Definitions:

Interval Data

A type of data that is measured along a scale, where each point is placed at a specific distance from others, but there is no true zero point.

Histogram

A graphical representation of the distribution of numerical data, often showing the frequency of data intervals.

Interval Data

A type of numerical data where the order and the exact differences between the values matter, but there is no true zero point.

Classes

Groupings or categories into which data or objects are organized based on common characteristics or attributes.