Which One of the Following Statements Is True Regarding the Trade-Off

question 84

Multiple Choice

Which one of the following statements is true regarding the trade-off theory?

• A) Highly profitable firms should have low debt ratios.
• B) All firms should have the same target debt-equity ratio.
• C) Riskier firms should have high target debt ratios.
• D) Less risky firms ought to have a greater amount of debt financing.

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Definitions:

Arrow's Impossibility Theorem

A theory stating that no rank-order voting system can meet a set of reasonable fairness criteria simultaneously.

Difficulties

Challenges or situations that require effort to overcome.

Borda Count

A voting method that ranks options or candidates based on points assigned by voters' preferences rather than a single preference vote.

Voting Method

A system or process used to determine the outcome of an election or decision by casting and counting votes.