Select all true statements. The static trade-off theory of capital structure: a. Cannot be modified...
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Select all true statements. The static trade-off theory of capital structure: a. Cannot be modified to account for the effect of bankruptcy costs b. Suggests that managers weigh the cost of bankruptcy against the benefit of tax-shields when deciding on debt financing c. Predicts that managers have preferred capital sources which they use to exhaustion before resorting to other financing means d. Assumes that debt levels contain no signaling value to investors e. Disagrees with the empirical evidence that managers follow a pecking-order f. Predicts that as corporate tax rates fall firms should choose to finance more by equity
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