Which one of the following statements is correct?
A) Informed managers tend to issue new securities when the existing securities are underpriced.
B) The financial market generally reacts in the same way to a new issue of equity as it does to a new issue of debt as long as the issuer is the same.
C) A decline in the price of existing stock when a new issue is released is a direct cost of selling securities.
D) Issuing new equity shares is always viewed by the market as a positive event.
E) A firm's existing shareholders would prefer that new securities be issued when those securities are overpriced rather than underpriced.
Correct Answer:
Verified
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