Which of the Following Supports the Trade-Off Theory of Capital

question 46

Multiple Choice

Which of the following supports the trade-off theory of capital structure?

• A) Companies use cash on hand first, since issuing equity and debt is expensive.
• B) A company's capital structure is the result of past equity and debt issuance decisions.
• C) Companies have a target capital structure.
• D) a and b.

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Definitions:

Average Fitness Payoff

A concept in evolutionary biology referring to the expected reproductive success of an organism from following a certain strategy or behavior.

Thief Phenotype

The thief phenotype describes individuals or organisms that steal resources or mates from others as an alternative reproductive strategy.

Population

A group of individuals of the same species living in the same geographic area, capable of interbreeding and creating offspring.

Solitary Phenotype

An organism or individual that prefers to live or operates alone, avoiding social groups or pairings.