The Pecking Order Hypothesis predicts which of the following?
A)Firms prefer internal financing first.
B)If external financing is required,firms should first seek debt financing.
C)If external financing is required,firms will choose to issue the safest or cheapest security first,starting with debt financing and using equity as a last resort.
D)All of these

Question

Quizplus · Accepted Answer

The Pecking Order Hypothesis predicts that firms prefer internal financing first and if external financing is required, they should first seek debt financing. It also suggests that if external financing is required, firms will choose to issue the safest or cheapest security first, starting with debt financing and using equity as a last resort. Therefore, all of these statements are included in the Pecking Order Hypothesis.

The Pecking Order Hypothesis Predicts Which of the Following