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Author Question: Which statement concerning capital structure theory is correct? (Read 1135 times)

knightj

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on: Aug 7, 2023
Which statement concerning capital structure theory is correct?

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According to the trade-off theory, an increase in the costs of bankruptcy would lead firms to reduce the amount of debt in their capital structures.


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According to the trade-off theory, the optimal capital structure strikes a balance between the tax benefits of debt and the firm’s WACC.


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The pecking order hypothesis asserts that the presence of flotation costs or asymmetric information may cause a firm to raise different types of capital in a sequence that maximizes these costs. 


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The market timing theory suggests that managers issue equity when they believe that stock market prices are abnormally low and issue debt when they believe that interest rates are abnormally high. 

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by knightj on Aug 7, 2023

swagmaster69

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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knightj

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it

lindahyatt42

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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