In general, observed capital structures:
A) Tend to overweigh debt in relation to equity.
B) Are easily explained in terms of earnings volatility.
C) Are easily explained by analyzing the types of assets owned by the various firms.
D) Tend to be those which maximize the use of the firm's available tax shelters.
E) Vary significantly across industries.

Question

Quizplus · Accepted Answer

Capital structures vary significantly across industries due to differences in asset types, business risks, and financial strategies. This variation is not easily explained by a single factor such as earnings volatility or the use of tax shelters, and there is no universal tendency to overweigh debt in relation to equity.

In General, Observed Capital Structures