Market timing means that managers may sell ________ when they believe the stock is over-valued and rely on ________ when the stock is undervalued.
A) debt, shares
B) debt, preferred stock
C) new shares, debt
D) debt, debt

Question

Quizplus · Accepted Answer

Market timing suggests that managers issue new shares when they believe their company's stock is overvalued (taking advantage of the higher price) and use debt financing when they believe the stock is undervalued (to avoid diluting ownership at a low price).

Market Timing Means That Managers May Sell ________ When They