Fill in the missing entries by choosing from the following terms: safe tangible assets, less, pecking order theory, capital, taxable income to shield, interest tax shields, financial distress, trade-off theory, more, risky assets.
Managers will try to increase debt levels to the point where the value of _____ is exactly offset by the additional costs of _____. This is known as the _____ of capital structure. The theory predicts that companies with _____ and plenty of _____ ought to borrow _____.