A signal that is likely to be inferred by the market when new common stock is issued is:

Question

Quizplus · Accepted Answer

When a company issues new common stock, it often signals to the market that the company might be facing financial difficulties or that its prospects are worse than previously believed. This is because issuing new stock dilutes existing shareholders' equity and can imply that the company was unable to secure financing through less costly means, such as debt financing.

A Signal That Is Likely to Be Inferred by the Market