Question
Which of the following is NOT one of the costs or benefits that firm managers trade off when choosing their capital structures? The use of
Which of the following is NOT one of the costs or benefits that firm managers trade off when choosing their capital structures?
The use of debt introduces the possibility of bankruptcy if the firm does not generate adequate cash flows
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Outside equity holders share profits and dilute the ownership of existing shareholders | ||
Outside equity holders are residual claimants who share the risk that the firm does not generate adequate cash flows
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The use of debt reduces the firms tax liability
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They want to signal to investors the private information that they have about the firms expected future cash flows |
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