According to the "pecking =-order theory" proposed by Stewart Myers of MIT, which of the following is/are correct?
1. For financing needs, firms prefer to first tap internal resources such as retained earnings, profits and excess cash
2. There is an inverse relationship between a firm's profit level and its debt level
3. Firms prefer to issue new equity rather than source external debt.
4. A firms capital structure is dictated by its need for external financing
1. 1 and 3 only |
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2. 2 and 4 only |
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3. 1, 3, and 4 only |
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4. 1, 2, and 4 only |
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