Which of the Following Statements Is Consistent with the Pecking

question 33

Multiple Choice

Which of the following statements is consistent with the pecking order theory?

• A)A positive relationship exists between leverage and profitability.
• B)For any given level of investment,less profitable firms will borrow more than highly profitable firms.
• C)For any given level of investment,less profitable firms will borrow less than highly profitable firms.
• D)The level of debt in a firm's capital structure is dependent upon the number of tax shield substitutes.

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