Which of the following statements regarding a firm's choice of financing is false?
A)Firms with higher marginal tax rates are more likely to issue debt than equity.
B)Firms with greater profitability are more likely to issue debt than equity.
C)Firms with more tangible assets are likely to use more debt in their capital structures.
D)Firms with fewer intangible assets are likely to use less debt in their capital structures.

Question

Quizplus · Accepted Answer

Firms with fewer intangible assets are actually more likely to use more debt, as tangible assets can be used as collateral for loans, reducing the risk for lenders.

Which of the Following Statements Regarding a Firm's Choice of Financing