Question: What does the pecking order theory postulate? A. There's no optimal debt-equity ratio; instead, a firm's capital structure is determined by its need for external

What does the pecking order theory postulate?

A. There's no optimal debt-equity ratio; instead, a firm's capital structure is determined by its need for external financing. B. The optimal capital structure is the point at which the tax benefit from an extra dollar in debt is exactly equal to the cost that comes from the increased probability of financial distress. C. The optimal capital structure is dependent upon the effective tax rate. D. The optimal capital structure is a highly leveraged firm because of the tax shield.

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