Which facts should lead abc corporation to set higher target

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Question 1: When considering the impact of distress costs on capital structure, which of the following facts should lead ABC Corporation to set a higher target debt ratio than XYZ Corporation (all else equal)?

Option 1: ABC's cash flows from operations are less volatile than XYZ's.

Option 2: ABC is a computer software firm, and XYZ is an electric utility.

Option 3: ABC operates in a more competitive industry than XYZ.

Option 4: ABC's assets have lower resale values than XYZ's assets.

Reference no: EM132554144

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