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Trade-off model

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Jason is suggesting that his company issue debt in order to finance an upcoming project, even though the firm has large cash reserves. He believes the market is currently underpricing his firm's stock, and would like investors to be convinced that the firm's true value is much higher. Which of the following capital structure theories provide the best explanation for Jason's suggestion?
Answer

trade-off model

pecking-order hypothesis

signaling model

managerial opportunism hypothesis

M & M capital structure model

Reference no: EM13528135

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