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what does the tradeoff theory say? ( Single Choice) Answer 1: optimal leverage happens when...

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Finance

what does the tradeoff theory say? ( Single Choice) Answer 1: optimal leverage happens when marginal tax benefits of debt equals marginal cost of financial distress Answer 2: firm should lever up as much as possible Answer 3: there is a tradeoff between manager-equity holder conflicts and debt-equity holder conflicts Answer 4: there is a tradeoff between tax benefits of debt and agency costs of debt

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