Capital structure theory suggests that companies may put the interests of ________ ahead of the interests of ________
A) Potential stockholders, existing stockholders
B) Stockholders, bondholders
C) Existing shareholders, IRS
D) There are no potential conflicts arising from the way a firm manages its capital structure.
Answer: B
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The expected return on a stock given various states of the economy is equal to the:
A. highest expected return given any economic state. B. arithmetic average of the returns for each economic state. C. summation of the individual expected rates of return. D. weighted average of the returns for each economic state. E. return for the economic state with the highest probability of occurrence.
Financial statements are optional accounting reports issued periodically by a firm which present information on the past performance of the firm,
a summary of the firm's assets and the financing of those assets, and a prediction of the firm's future performance. Indicate whether this statement is true or false.