An empirical evidence against the clientele effect is that firms rarely adjust their capital structure, while changes in investors' preferences usually happen at a higher frequency.

True/False (Circle one) (and explain)

To account for the debt tax shield, the APV method lowers the discount rate, while the WACC method adds the PV(DTS) to the value of an all equity financed firm.

True/False (Circle one) (and explain)

Answer rating: 100% (QA)

True The statement is true The clientele effect suggests that firms have a preferred capital structu... View the full answer