Multiple Choice
Why might the stock price drop when new equity issues are announced?
A) issuing stock may indicate that the firm has too much debt or not enough liquidity
B) if the projects are really favorable, why doesn't the firm just issue debt so that the existing stockholders get all the gain
C) management knows the stock is overvalued, so they are trying to sell the stock when the price is high
D) all of the above are reasons the stock price might drop
Correct Answer:
Verified
Correct Answer:
Verified
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