According to the Pecking-Order Theory Proposed by Stewart Myers of MIT,which

question 1

Multiple Choice

According to the pecking-order theory proposed by Stewart Myers of MIT,which of the following are correct?
I.For financing needs,firms prefer to first tap internal sources such as retained profits and excess cash.
II.There is an inverse relationship between a firm's profit level and its debt level.
III.Firms prefer to issue new equity rather than source external debt.
IV.A firm's capital structure is dictated by its need for external financing.

• A) I and III only
• B) II and IV only
• C) I, III, and IV only
• D) I, II, and IV only
• E) I, II, III, and IV
• F) None of the above.

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