According to the Static Capital Structure Theory

question 11

Multiple Choice

According to the static capital structure theory:

• A)because of their preference to finance investment from retained earnings,firms avoid debt and adapt their dividend policies to reflect their anticipated investment needs.
• B)if the firm has excess cash,it will tend to pay off its debt prior to repurchasing shares.
• C)firms weigh the costs of having too much debt when they are doing poorly against the tax benefits of debt when they are doing well to arrive at their optimal capital structures.
• D)if external financing is required; firms tend to issue the safest security first.

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Definitions:

Business Processes

Procedures or sets of activities that are performed in an organization to provide products or services to customers or to manage internal functions.

Customer Satisfaction

A measure of how products or services meet or surpass customer expectations, crucial for maintaining customer loyalty and driving business success.

BPI

A systematic method, Business Process Improvement aims to optimize the basic processes of an organization, leading to enhanced efficiency.

Analysis Phase

A stage in the development process where the needs or conditions to meet for a new or altered product or project are determined.