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

question 60

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

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Definitions:

Radical Behaviorism

A theory in psychology that views behavior as the main subject of psychology and emphasizes the influence of the environment on observable behavior.

Graduate School

An advanced program of study focused on a particular academic discipline or profession, typically following the completion of an undergraduate degree.

Skinner's Theory

A psychological theory developed by B.F. Skinner that emphasizes the importance of reinforcement and punishment in shaping behavior through operant conditioning.

Radical Behaviorism

A branch of behaviorism that views all behavior as a consequence of environmental interactions and rejects the notion of inner states like thoughts and feelings as causes of behavior.