The Modigliani and Miller theories are based on several unrealistic assumptions about debt financing. In reality, there are costs, taxes, and other factors associated with debt financing. These costs or effects have led to several theories that explain the impact of these factors on the capital structure of a firm Based on your understanding of the trade-off theory, what kind of firms are likely to use more leverage? O Firms that have relatively higher business risk compared to other firms in their industry O Firms that have relatively lower business risk compared to other firms in their industry Based on your understanding of the capital structure theories, identify the best option for the missing part of the statement. Option 1 Option 2 According to signalling theory, a firm with a very positive outlook might tend to use debt financing ?777 the normal target capital structure Beyond Equal to According to the windows of opportunity theory managers ?2?? in efficient markets. Don't believe Believe Firms that maintain an adequate reserve borrowing capacity will be able to ???? money at a reasonable cost when good investment opportunities arise. Borrow Lend