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18. A firm has issued too much debt and is considering a seasoned offering (issuing more stock) to raise money to pay off a good
18. A firm has issued too much debt and is considering a seasoned offering (issuing more stock) to raise money to pay off a good portion of its debt. This is considered A. bankruptcy. B. liquidating C. illegal D. restructuring. 19. Which of the following is true about a firm with no equity financing? A. The return on equity cost of debt B. The after-tax cost of debt-WACC C. The cost of debt-WACC D. The return on equity WACC 20. What does the pecking order theory postulate? A. The optimal capital structure is dependent upon the effective tax rate. B. The optimal capital structure is a highly leveraged firm because of the tax shield. C. The optimal capital structure is the point at which the tax benefit from an extra dollar in debt is exactly equal to the cost that comes from the increased probability of financial distress. D. There's no optimal debt-equity ratio; instead, a firm's capital structure is determined by its need for external financing
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