Which of the Following Is NOT a Sensible Reason for a Firm

question 18

Multiple Choice

Which of the following is NOT a sensible reason for a firm to rely on internal funds?

• A)Equity issues are generally expensive.
• B)A new bond issue may drive the firm's debt ratio too high.
• C)Financial markets interpret the issuance of equity unfavorably.
• D)All of these are sensible reasons to rely on internal funds.

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Definitions:

Wilcoxon Rank Sum Test

A nonparametric statistical test for assessing whether two samples come from the same distribution, based on rank sums.

Alternative Hypothesis

The hypothesis that there is a significant difference between groups or conditions, contrasting the null hypothesis in statistical testing.

Systematically Larger

Relating to something that consistently exhibits larger values or sizes than others within a set or compared to a benchmark.

Normal Approximation

A method used in statistics to approximate a binomial distribution with a normal distribution when the sample size is large enough.