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When a firm increases its capital structure ratio, what sort of signal is likely being sent to the market? The firm has unfavorable prospects, thus

When a firm increases its capital structure ratio, what sort of signal is likely being sent to the market? The firm has unfavorable prospects, thus they're decreasing the amount of debt held The firm has unfavorable prospects, thus they're increasing the amount of debt held the firm has favorable prospects, thus they're increasing the amount of debt held the firm has favorable prospects, thus they're decreasing the amount of debt held

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