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

question 62

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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