According to the Signaling Theory, a Firm with Unfavorable Future

Multiple Choice

According to the signaling theory, a firm with unfavorable future prospects might issue common stock in an effort to:

A) share any losses with new stockholders (owners) .
B) increase bankruptcy costs associated with the firm.
C) skip the regular dividend payments on common stock.
D) maintain a reserve borrowing capacity.
E) increase the tax benefit it derives from dividend payments to stockholders.