1. Discuss the importance of the “pecking order” theory for managing the capital structure of a company, in terms of both short-term, tactical financing decisions and long-term, strategic decisions.

2. Which statement(s) is / are true?

a) An increase in debt level increase the cost of equity?

b) A decrease in debt level lowers the cost of equity?

c) An increase of debt typically lowers the firm’s cost of capital?

d) An increase in equity levels lowers the firm’s cost of capital?

e) All of the above

f) None of the above