Which one of the following lists presents the order of financing from most preferred to least preferred according to the pecking-order theory?
A) Debt issue, stock issue, internally generated funds
B) Internally generated funds, debt issue, stock issue
C) Stock issue, internally generated funds, debt issue
D)Internally generated funds, stock issue, debt issue

Question

Quizplus · Accepted Answer

According to the pecking-order theory, internally generated funds are the most preferred form of financing. Debt issue is the second most preferred form of financing, followed by stock issue as the least preferred. Therefore, the order would be as follows: Internally generated funds, debt issue, and stock issue. Option B presents this order correctly.

Which One of the Following Lists Presents the Order of Financing