If a firm changes their capital structure by immediately selling additional claims of one type of capital and using the proceeds to retire another kind of claims, they are using this type of capital structure change.

Question

Quizplus · Accepted Answer

This is an active capital structure change because the firm is actively altering its capital structure by selling one type of capital and using the proceeds to retire another, rather than passively allowing changes to occur over time.

If a Firm Changes Their Capital Structure by Immediately Selling