Everything Else Equal, If a Firm with Favorable Future Prospects

Multiple Choice

Everything else equal, if a firm with favorable future prospects raises funds by issuing new shares of common stock, _____. 

A) its debt/assets ratio should increase
B) its marginal bankruptcy-related costs should increase
C) its retained earnings will increase immediately
D) its taxable income should decrease
E) the price of its stock will increase when future profits are realized by the firm