The pecking order hypothesis states that managers will have a preference to fund investment by using , followed by , and will issue as a last resort.

Question

Quizplus · Accepted Answer

According to the pecking order hypothesis, managers prefer to fund investments through internal funds such as retained earnings first, followed by debt, and finally equity as a last resort. Therefore, the correct sequence of funding sources is retained earnings, debt, and equity, which is outlined in option C.

The Pecking Order Hypothesis States That Managers Will Have a Preference