The available options of the firm with an overhanging issue to finance the call include all of the following EXCEPT
A) selling additional debt resulting in a higher debt ratio.
B) using current retained earnings.
C) selling additional common equity resulting in less dilution of EPS.
D) selling additional preferred stock resulting in higher financial leverage.

Question

Quizplus · Accepted Answer

Selling additional common equity would result in more dilution of EPS, not less.

The Available Options of the Firm with an Overhanging Issue