According to Pecking-Order Theory, Managers Will Often Choose to Finance

question 108

Multiple Choice

According to pecking-order theory, managers will often choose to finance with:

• A) new equity rather than debt, due to bankruptcy costs.
• B) debt rather than new equity, to avoid reduced share price.
• C) debt rather than retained earnings, to lower the WACC.
• D)new equity rather than debt, to strengthen EPS.

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Definitions:

Organizational Context

The combination of internal and external factors that influence how an organization operates and affects its strategies and performance.

Team Design

The method of organizing a team's structure, roles, and communication patterns to optimize its effectiveness and collaboration.

Team Culture

The shared values, beliefs, norms, and practices that shape the behavior and interaction of members within a team.

Ethnic Origin

pertains to the background or heritage of an individual, identifying them as belonging to a specific racial, national, or cultural group.