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

question 62

Multiple Choice

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

• A) Target debt ratios are similar among firms in the same industry.
• B) Riskier firms tend to rely mostly on debt financing.
• 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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