The Theory That Managers May Prefer Internal Sources of Funds

question 60

Multiple Choice

The theory that managers may prefer internal sources of funds to the lowest cost source of funds is known as

• A) the Modigliani and Miller Proposition.
• B) tradeoff theory.
• C) financial stress avoidance theory.
• D) pecking order theory.

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Definitions:

Parents

The caregivers of a child, who may be biological, adoptive, or guardian figures, responsible for the child's upbringing and development.

Stepparent

An individual who is married to a person with children from a previous relationship, but is not their biological parent.

Biological Children

Children genetically related to their parents, as opposed to adopted children.

Childfree

The decision or condition of not having children by choice, focusing on personal, social, or environmental reasons.