Debt levels across industries vary widely. Debt ratios in most countries are considerably less than 100 percent. Some firms use no debt. Capital structures are fairly constant across industries. Most corporations have relatively low debt-asset ratios.

Complete Question:

Which one of the following is not empirically correct?

A. Debt levels across industries vary widely

B. Debt ratios in most countries are considerably less than 100 percent.

C. Some firms use no debt.

D. Capital structures are fairly constant across industries.

E. Most corporations have relatively low debt-asset ratios.

The not empirically correct statement is:

D. Capital structures are fairly constant across industries.

Explanation:

Instead, the capital structures across industries vary significantly.  Firms with large asset investments tend to have more leverage than others with less asset investments.  And this situation of having or not having large investments in assets cuts across firms in the same industry.  This suggests that their capital structures will always vary not because of the industry but the choices made by the firm's management.  Capital structures are also influenced by taxes and operating income uncertainties, which also vary within the same industry.

a. money supply  

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