Which of the Statements Below Is TRUE

Multiple Choice

Which of the statements below is TRUE?

A) Debt capacity refers to the ability to add equity financing to the current borrowing of the firm and still be able to make interest and principal repayments on time.
B) The asymmetric information foundation for the Pecking Order Hypothesis (POH) is that managers know less about their companies than the outside world.
C) There are three implications of the POH.One of these is that profitable companies will borrow less (because they have more internal funds available) and may have lower debt-equity ratios because they have more debt capacity.
D) There are three implications of the POH.One of these is that more profitable companies will need more external funding and will first seek debt financing in an asymmetric world,avoiding the equity market.