Which One of the Following Statements Is True Regarding the Trade-Off

question 84

Multiple Choice

Which one of the following statements is true regarding the trade-off theory?

• A) Highly profitable firms should have low debt ratios.
• B) All firms should have the same target debt-equity ratio.
• C) Riskier firms should have high target debt ratios.
• D) Less risky firms ought to have a greater amount of debt financing.

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Definitions:

Nägele's Rule

A standard way of estimating the due date for a pregnancy based on the date of a woman's last menstrual period, adding one year, subtracting three months, and adding seven days to that date.

Menstrual Period

The monthly shedding of the uterine lining in women and female mammals, accompanied by bleeding.

Estimation

The process of making an approximate calculation or judgment about a quantity or value, often without exact data.

Cervical Biopsy

A medical procedure in which a small section of tissue is removed from the cervix for examination under a microscope to detect abnormalities or disease.