Question: The trade-off theory cannot explain: a. why companies are generally expansive in using debt finance. b. why financial leverage is high for high debt to

The trade-off theory cannot explain:

a.

why companies are generally expansive in using debt finance.

b.

why financial leverage is high for high debt to equity ratio companies.

c.

why evidence suggests that leverage is positively related to profitability.

d.

why financial leverage is similar, on average, across many countries despite differences in their tax systems.

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