Question 1 7 points Save Answer CHAPTER 17 From the list below, select all statements that are TRUE. TRUE FALSE Don't try to click on all four statements! Negative points are given for all incorrectly chosen statements. Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 40% corporate income tax rate, its stockholders face a 25% income tax rate, and its creditors face a 23% tax rate, then such firm may choose to have more debt. When the firm is in financial distress, stockholders have an incentive to take risks because they would get more money than the bondholders if the firm invests into riskier rather than safer projects. The signaling theory says that firms increase their amount of debt for as long as the financial benefits of doing that exceed the resulting potential financial distress costs. Just like with the signaling theory, under the pecking order theory firms want to send a certain signal to the investors. A Moving to another question will save this response. Question 1 of 7