Which Theory Proposes That Companies Have an Optimal Capital Structure

question 2

Multiple Choice

Which theory proposes that companies have an optimal capital structure based on a trade-off between the benefits and costs of using debt?

• A)Trade-off theory.
• B)Reverse pecking order theory.
• C)Information asymmetry theory.
• D)Pecking order theory.

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Definitions:

Type A Personalities

Individuals with Type A personalities are characterized by a constant sense of urgency, competitiveness, and a high level of stress.

External Locus

A belief system where individuals think that their life events are controlled by external forces or luck rather than their own efforts.

Emotion-Focused Coping

A strategy aimed at managing the emotional response to a problem rather than confronting the problem itself.

Faith Factor

The hypothesis that religious belief and participation can positively affect mental and physical health.