Which of the Following Provides Evidence That Is Consistent with the Pecking

question 13

Multiple Choice

Which of the following provides evidence that is consistent with the pecking order theory?

• A)An unusually profitable firm in an industry with relatively slow growth will end up with an unusually high debt/equity ratio.
• B)An unusually profitable firm in an industry with relatively high growth will end up with an unusually low debt/equity ratio.
• C)An unprofitable firm in an industry with relatively slow growth will end up with a low debt/equity ratio.
• D)Companies' past needs for external finance,rather than a target capital structure,determine capital structures.

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Definitions:

Reasonable Steps

Actions or measures that are considered sensible and proportionate in a given situation to achieve a specified outcome.

Welfare

A government program that provides financial aid to individuals or groups in need.

State Interest

The concerns or objectives that are deemed important for the well-being or security of the state and its citizens.

Jehovah's Witness

A member of a Christian denomination known for its non-participation in political processes and refusal of blood transfusions.