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.

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Definitions:

Space

An expansive concept that includes physical area, distance between objects, and the universe beyond Earth.

Numbers

Symbols or expressions used to represent quantities in mathematics.

Object Permanence

The cognitive understanding that objects continue to exist even when they are out of sight, typically developed during infancy.

Egocentrism

The inability to differentiate between one's own perspective and someone else's perspective, often observed in early childhood development.