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Which of the following conclusions is correct about trade-off theory? Select one: a. There is some threshold level of debt when financial distress costs reduce

Which of the following conclusions is correct about trade-off theory? Select one: a. There is some threshold level of debt when financial distress costs reduce the tax benefits on debt at an increasing rate b. The tax benefits exceed the financial distress costs beyond the threshold level of debt c. Firms increase their use of debt to increase the tax benefits on debt at an increasing rate. d. When the financial distress costs start to increase firms withhold their level of debt.

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