Economics · Financial Management - Capital Structure Theories
Match List I with List II regarding Capital Structure Theories: List I (Theory) A. Modigliani-Miller (No Tax) B. Traditional Approach C. MM with Corporate Tax D. Pecking Order Theory List II (Core Concept) I. Optimal debt-equity ratio exists and matters for firm value II. Capital structure is irrelevant to firm value III. Value of a leveraged firm is higher than an unleveraged firm due to tax shields IV. Financing hierarchy preference: internal funds → debt → equity Choose the correct matching option:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A-I, B-III, C-II, D-IV
- 2A-II, B-III, C-I, D-IV
- 3A-II, B-I, C-III, D-IV✓
- 4A-I, B-II, C-III, D-IV
Correct answer
A-II, B-I, C-III, D-IV
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