Solved: Compare trade-off theory and pecking-order theory, Finance Basics

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Compare trade-off theory and pecking-order theory

Several theories are proposed to explain how companies deal with debt and financial distress.

QUESTIONS:

Question 1. Compare and contrast trade-off theory and pecking-order theory.

Question 2. Describe a specific business that seems to follow trade-off theory and another that follows pecking-order theory.

Question 3. Why would these theories be more applicable in some industries than others?

Please include references.

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Finance Basics: Compare trade-off theory and pecking-order theory

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