The Pecking Order Explanation of Capital Structure States That a Hierarchy

question 65

True/False

The pecking order explanation of capital structure states that a hierarchy of financing exists for firms, in which new external debt financing is employed first, followed by retained earnings and finally by external equity financing.

---

Definitions:

Provincial Personal Property

Property other than real estate, such as cars, furniture, or jewelry, that is subject to the laws of a specific province in Canada.

Security Interest

A legal claim or lien on assets, which secures payment or performance of an obligation to the asset's holder.

Bona Fide Purchaser

A legal term for a person who acquires property in good faith and without notice of any other party's claim to the title of that property.

Automobile

A road vehicle, typically with four wheels, powered by an internal combustion engine or electric motor, used for transportation.