The Pecking Order States How Financing Should Be Raised

question 41

Multiple Choice

The pecking order states how financing should be raised. In order to avoid asymmetric information problems and misinterpretation of whether management is sending a signals on security overvaluation the firm's first rule is to:

• A) finance with internally generated funds as there is no market interaction.
• B) always issue debt then the market won't know when management thinks the security is overvalued.
• C) reduce asymmetry before any financing activity.
• D) increase the financial slack to reduce the reliance on internally generated funds.

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Definitions:

Medical Care

Refers to the services provided by health professionals to diagnose, treat, and prevent illness, injury, and other physical and mental impairments in people.

Sick Role

A concept in medical sociology that describes the patterns of behavior that a sick person adopts to minimize the disruptive impact of their illness on others.

Theoretical Perspective

An established principle or set of principles proposed to explain phenomena, guiding the collection and analysis of related facts.

Utilize Health Services

The act of seeking and making use of medical care, treatments, and facilities to maintain or improve one's health.