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  3. Study Set
    Fundamentals of Corporate Finance Study Set 22
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    Exam 16: Financial Leverage and Capital Structure Policy
  5. Question
    If the Static Theory of Capital Structure Is True, Then
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If the Static Theory of Capital Structure Is True, Then

Question 167

Question 167

True/False

If the static theory of capital structure is true, then the optimal level of debt for a given firm
increases as its marginal tax rate increases and decreases as the costs of financial distress
increase.

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