Question: 16. The capital structure weights used in computing the weighted average cost of capital: A. are restricted to the firm's debt and common stock only

16. The capital structure weights used in computing the weighted average

16. The capital structure weights used in computing the weighted average cost of capital: A. are restricted to the firm's debt and common stock only B. are based on the book values of total debt and total equity. C. are based on the face value of total debt and market value of total equity. D. may change over time even if the firm does not issue new securities. 17. Which of the followings is the prediction from the pecking-order theory? A. firms prefer equity issuance to debt issuance B. profitable firms use less debt C. firms should keep a constant amount of cash D. firms with volatile earnings should use less debt

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