In general,the capital structures used by U.S. firms:
A) tend to overweigh debt in relation to equity.
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) vary significantly across industries.

Question

Quizplus · Accepted Answer

Capital structures used by U.S. firms vary significantly across industries. Different industries have different levels of risk, growth opportunities, and financing options, which can influence their choices of capital structure. For example, capital-intensive industries such as utilities may rely more on debt financing while technology companies may rely more on equity financing. Therefore, it is difficult to generalize the capital structures used by all U.S. firms.

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