Capital market conditions can affect the timing of a new equity issue because:
A)Issuing new equity may be harder when stock prices are rising.
B)Issuing new equity may be easier when stock prices are rising.
C)Issuing new equity may be harder when stock prices are falling.
D)B and C

Question

Quizplus · Accepted Answer

Capital market conditions can affect the timing of a new equity issue because when the stock prices are rising, investors may be less willing to buy new shares at a higher price, making it harder to issue new equity. On the other hand, when stock prices are falling, investors may be hesitant to invest in a company, making it harder to issue new equity. Therefore, issuing new equity may be easier when stock prices are rising, but harder when stock prices are falling.

Capital Market Conditions Can Affect the Timing of a New