When a Firm Commits to Large Future Debt Payments to Convince

question 97

Multiple Choice

When a firm commits to large future debt payments to convince the stock market it has great projects,this is an example of:

• A)market timing.
• B)adverse selection.
• C)the pecking order hypothesis.
• D)the agency cost of debt.
• E)the signalling theory of debt.

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Definitions:

Circuit Switching

A method of implementing a telecommunications network in which a dedicated communication path is established between two points for the duration of a transmission session.

Static IP

A permanent Internet Protocol address assigned to a computer by an Internet service provider, allowing it to have a consistent address within a network.

Dynamic IP

An IP address that can change each time a device connects to the internet, as opposed to static IP addresses which remain constant, providing flexibility and efficiency for managing internet connections.

IPv4

An Internet Protocol version 4 is a widely used protocol in data communication over different kinds of networks. It's an addressing system that uses numeric identifiers for devices.