Which of the Following Is an Implication Drawn from the Pecking

question 42

Multiple Choice

Which of the following is an implication drawn from the pecking order theory:

• A)Internal financing is a last resort due to shareholders' desire for current income.
• B)Debt financing is a last resort due to the large direct and indirect bankruptcy costs associated with this form of financing.
• C)Due to high information costs associated with riskier securities,companies will only issue equity as a last resort.
• D)Managers have no preference about the form of financing they employ.

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Definitions:

Presenter's Warranties

Guarantees provided by the individual or entity presenting a document (e.g., a check or draft) indicating its authenticity and validity.

Payment

The transfer of money or goods from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Acceptance

In contract law, the expression of assent to the terms of an offer in such a manner that a binding contract is formed between the parties.

Waiver Of Presentment

An agreement to waive the formal presentation of an instrument, such as a check or draft, for payment.