All of the Following Statements Are Correct Except

question 2

Multiple Choice

All of the following statements are correct except:

• A)The pecking order hypothesis is a theory that states managers prefer to use new debt to finance the firm, then retained earnings, and (as a final resort) new equity. Too many clones
• B)The market timing hypothesis states that firms try to time the equity market by issuing stock when their stock prices are low and repurchasing shares when stock values are high.
• C)The static tradeoff hypothesis states that firms will balance the advantages of equity (its lower cost and tax-deductibility of interest) with its disadvantages (greater possibility of bankruptcy and the value of explicit and implicit bankruptcy costs).
• D)Agency costs increase the optimal level of debt financing for a firm above the level that would be appropriate if agency costs were zero.
• E)None of the above statements are correct.

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Definitions:

Passive Management

A leadership style characterized by minimal intervention, letting processes and issues unfold or resolve naturally without active direction.

Contingent Reward

A leadership strategy that offers rewards or incentives based on the achievement of specific goals or performance criteria.

Political Conflict

Disagreements or disputes that arise from differences in views, interests, or goals related to governance, policies, or political ideologies.

Ideological Conflict

Disagreements or disputes arising from deeply held beliefs or values between individuals or groups.