Which of the following is the explanation of why the market generally reacts negatively to the announcement of a SEO offered in the pecking order hypothesis?
A) Management is taking a self-serving action.
B) Management is signaling that the shares are overpriced.
C) Creditors are forcing the firm to increase its equity base.
D) The firm is revealing that it has not generated as much earnings as the market expected.
Correct Answer:
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