Question

5) The Trade-off Theory of Capital Structure most directly relates to… (here, clearly circle the TWO that most

directly apply to this concept)

i)The interest tax shield of debt

ii)The depreciation tax shield

iii)The expected costs of bankruptcy

iv)The trade-off between managers and shareholders

v)The trade-off between bondholders and shareholders

6) The Pecking Order Theory of Capital Structure most directly relates to…

i)Bankruptcy costs

ii)Tax shields

iii)Transactions costs

iv)Information Asymmetry

v)Managerial hubris

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