An individual seeks to finance a home addition. This individual takes out a home equity line, due to the tax benefits of this type of financing, but only takes the loan in the amount in which she feels will not be over borrowing or too much debt for her financial situation. This would be an example of:
A) agency theory.
B) signaling theory.
C) pecking order theory.
D) static trade-off theory.

Question

Quizplus · Accepted Answer

The Answer of An individual seeks to finance a home addition. This individual takes out a home equity line, due to the tax benefits of this type of financing, but only takes the loan in the amount in which she feels will not be over borrowing or too much debt for her financial situation. This would be an example of:
A) agency theory.
B) signaling theory.
C) pecking order theory.
D) static trade-off theory.

An Individual Seeks to Finance a Home Addition