QUESTION

27. According to the signaling theory of capital structure, firms first use common equity for their capital, then use

Category: Business
Subject: Finance
Due Date: 01/27/2016
Question Asked: 2016-01-27 19:26:22

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27. According to the signaling theory of capital structure, firms first use common equity for their

capital, then use debt if and only if they can raise no more equity on "reasonable" terms. This

occurs because the use of debt financing signals to investors that the firm's managers think that

the future does not look good.

A) True

B) False

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Posted on 2016-01-27 19:26:22

User: LightspeedLearning
Rating: No Rating (0)
earnings: $1.10
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...re, firms first use common equity for their capital, then use debt i...

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