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Refer to the figure for the comparison of MM propositions and the "trade-off theory" of capital...

Refer to the figure for the comparison of MM propositions and the "trade-off theory" of capital structure, as we discussed in lectures, there should be an optimal level of leverage ratio (or debt-equity ratio) according to the "trade-off theory".

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Answer #1

The given statement is true

Explanation :- Trade off theory suggests what should be the capital structure that means how much should be debt and how much should be equity by considering cost and benefits and it says there should be optimal capital structure.

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