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:

Sodium

A chemical element with symbol Na and atomic number 11, essential for human health but consumed in excess can lead to health issues.

Diets

Regulated eating plans designed for weight loss, medical reasons, or to achieve or maintain a specific health goal.

Strategic Planning

The process of thoughtfully defining a firm’s objectives and developing a method for achieving those objectives.

Objectives

Specific, measurable goals that are set to be achieved within a time frame, serving as guiding principles for initiatives or projects.