Question

The point at which the tax saving from an additional dollar in debt financing is exactly balanced by the increased costs of bankruptcy associated with additional borrowing is the essence of the Blank______.

Multiple choice question.

dynamic theory of capital structure


hyperbolic theory of capital structure


signaling theory


static theory of capital structure

Answer 1

The point at which the tax saving from an additional dollar in debt financing is exactly balanced by the increased costs of bankruptcy associated with additional borrowing is the essence of the **static theory of capital structure**.