1

Based on your understanding of the trade-off theory, what kind of firms are likely to use more leverage?

Answer:

The firm  has lower risk compare  to other firm in the industry

explanation: Explanation: Close A Firms with stable earnings and less business risk have a better ability to service debt.

2

Based on your understanding of the capital structure theories, identify the best option for the missing part of the statement

According to signaling theory, a firm with a very positive outlook might tend to use debt financing . he normal target capital structure

Answer: Beyond

. According to window of…Markets

Answer: Believe

.Firm that maintain……….opportunity arise

Answer: Borrow

3

Firm prefer internal fund but forced to  external capital they prefer debt rather than equity issuance

identify which theory described by the statement

answer:

Peaking order hypnosis