Which of the following is not empirically true when formulating capital structure policy?
A)Some ﬁrms use no debt.
B)Most corporations have low debt-asset ratios.
C)There are no differences in the capital-structure of different industries.
D)Debt levels across industries vary widely.
E)Debt ratios in most countries are considerably less than 100%.

Question

Quizplus · Accepted Answer

There are significant differences in the capital structure of different industries. Some industries, such as utilities, tend to have higher levels of debt due to their stable cash flows, while other industries, such as technology, tend to have lower levels of debt due to their highly variable cash flows. Therefore, option C is not empirically true when formulating capital structure policy.

Which of the Following Is Not Empirically True When Formulating