Which of the Following Is True of the Market-Timing Theory

question 13

Multiple Choice

Which of the following is true of the market-timing theory of capital structure?

• A)Each firm will have an optimal capital structure,and firms will aim over the long term to converge to that capital structure.
• B)Managers take advantage of exiting conditions to derive the maximum value from financing.
• C)The dynamic capital structure of firms is determined by a pecking order of financing choices.
• D)Firms will tend to have more equity after good performance,and more debt after bad performance.

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