In general,the capital structures used by U.S.firms:
A)vary significantly across industries.
B)are easily explained in terms of earnings volatility.
C)are easily explained by analyzing the types of assets owned by the various firms.
D)tend to be those which maximize the use of the firm's available tax shelters.
E)tend to overweight debt in relation to equity.

Question

Quizplus · Accepted Answer

Capital structures vary significantly across industries due to factors such as industry regulations, level of competition, and availability and cost of capital. Therefore, it is difficult to generalize the capital structures of U.S. firms based solely on their earnings volatility or asset types owned. Tax shelters may play a role in the decision-making process, but it is not the primary factor that drives the capital structure of most firms. Additionally, the use of debt and equity in a capital structure is dependent on individual firm's risk tolerance, growth potential, and profitability, and may not necessarily overweight debt in relation to equity.

In General,the Capital Structures Used by U.S.firms