Examlex

Solved

The Pecking Order Theory: a Firm Wishes to Undertake a Project

question 50

Multiple Choice

The pecking order theory: A firm wishes to undertake a project that costs $150mm. It currently has $10mm in cash on hand and believes that it can raise $75mm in debt and $100mm in equity if needed. According to the pecking order theory of the capital structure, what percent of the project will be financed by debt?


Definitions:

Gambler's Fallacy

The incorrect belief that future probabilities are altered by past events in a random process.

State Lottery

A government-regulated form of gambling which involves the drawing of numbers for a prize.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Infant Vocalisations

The earliest forms of vocal communication emitted by infants, including cooing and babbling sounds.

Related Questions