About the trade-off theory of capital structure

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Which of the following statements about the trade-off theory of capital structure is most correct?

1) The trade-off theory can be used to set a precise optimal structure for any given business.

2) The trade-off theory tells us that businesses should use almost 100 percent debt financing.

3) The trade-off theory tells us that businesses should use almost no debt financing.

4) The trade-off theory tells us that businesses should use some debt financing but not too much.

5) The trade-off theory has no applicability to not-for-profit businesses.

Reference no: EM131275802

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