In regard to new issues of common stock,economists have found that the announcement of a new issue:

Question

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The announcement of a new issue of common stock means that there will be more shares in the market, which dilutes the value of each existing share. This dilution effect causes the stock price to fall. In addition, investors may see the new issue as a sign that the company needs to raise capital and may be experiencing financial difficulties, which can further depress the stock price. Therefore, the best choice is A) results in the stock price falling.

In Regard to New Issues of Common Stock,economists Have Found