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According to the Market Timing theory of capital structure, mangers issue equity when they cannot issue debt anymore equity prices are abnormally low equity prices

According to the Market Timing theory of capital structure, mangers issue equity when

  1. they cannot issue debt anymore
  2. equity prices are abnormally low
  3. equity prices are abnormally high
  4. interest rates are abnormally low

According to theTrade-off Theory of capital structure,there is a trade-off between

  1. cost of tax and benefit of tax
  2. bankruptcy costs and tax shield
  3. tax savings and tax costs
  4. cost of business risk and benefit of business risk

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