If a firm changes their capital structure by waiting until the firm requires additional capital to cover capital budgeting needs and then selling more of the type of claims they wish to increase, they are using this type of capital structure change.

Question

Quizplus · Accepted Answer

This is an example of a passive capital structure change, as the firm is not actively making changes to the mix of their financing sources but rather waiting for a natural need for additional capital to arise before adjusting their capital structure.

If a Firm Changes Their Capital Structure by Waiting Until