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    Financial Management Principles and Applications Study Set 2
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    Exam 15: Capital Structure Policy
  5. Question
    The Trade-Off Theory of Capital Structure Recognizes the Tax-Shield Benefit
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The Trade-Off Theory of Capital Structure Recognizes the Tax-Shield Benefit

Question 14

Question 14

True/False

The trade-off theory of capital structure recognizes the tax-shield benefit of debt financing, but also recognizes that the benefit may at some point be offset by costs associated with financial distress.

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