The Pecking Order Theory of Capital Structure Predicts That

question 73

Multiple Choice

The pecking order theory of capital structure predicts that:

• A)if two firms are equally profitable,the more rapidly growing firm will borrow more,other things equal.
• B)firms prefer equity to debt financing.
• C)firms prefer financing by debt versus internally generated cash.
• D)high-risk firms will end up borrowing more.

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