A valuable firm will tend to:
A)see its stock price increase if it issues debt beyond its optimal debt level.
B)issue more debt than a less valuable firm of comparable size.
C)reduce its debt level as a positive signal for the firm.
D)issue debt,but only on a temporary basis purely to fool investors regarding the firm's value.
E)see its stock price increase when it announces an exchange offer that decreases its leverage.

Question

Quizplus · Accepted Answer

Valuable firms often have more stable cash flows and can support higher levels of debt compared to less valuable firms, making them more likely to issue more debt.

A Valuable Firm Will Tend To