About the trade-off theory of capital structure

Assignment Help Financial Management

Reference no: EM131605968

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

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

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

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

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

The trade-off theory is based on the premise that preferred stock can be substituted (traded off) for common stock.

Reference no: EM131605968

Questions Cloud

Describe how cash budget is created : Describe how a cash budget is created, and what information a cash budget provides to a company.

Financial ratios can be used to measure firm performance : Describe how financial ratios can be used to measure a firm’s performance.

Semiannual coupons with annual coupon rate : Compute the price of a 1.5 year bond with principal $100, semiannual coupons with annual coupon rate of $20 at each of these dates.

Company should decide whether to take cash discount : Describe how a company should decide whether to take a cash discount

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

What should be the one year forward rate of british pound : The covered interest rate parity holds in an approximated form, what should be the 1-year forward rate of British pound?

Describe risk management techniques : describe risk management techniques that do not use financial contracts.

Pitfalls associated with irr apply to specific project : How an analyst can determine if the pitfalls associated with IRR apply to a specific project.

Greatest effect on the value of company or project : Explain how an analyst can determine what factors have the greatest effect on the value of a company or project.

User Account

All Pages