The trade-off theory states that the capital structure decision involves a tradeoff between the costs and benefits of debt financing.

Name: The trade-off theory states that the capital structure decision involves a tradeoff between the costs and benefits of debt financing.
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Question

Quizplus · Accepted Answer

The trade-off theory proposes that the optimal capital structure of a company involves a trade-off between the tax benefits and costs of debt financing. As such, the answer is true.

The Trade-Off Theory States That the Capital Structure Decision Involves