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

question 27

Multiple Choice

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

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

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Definitions:

Positioning Statement

A concise description of how a product or brand differentiates itself from competitors in the eyes of the target market.

Building A Brand

The process of creating a unique image and identity for a product or service in the consumer's mind, through marketing, experience, and consistent messaging.

Advertising Copy

The text used in advertising material to convey the message or information about a product or service.

Spokesperson

An individual appointed or chosen to represent and speak on behalf of an organization or a group in public or media settings.