One Implication of Information Asymmetry Between Investors and Firm Managers

question 75

True/False

One implication of information asymmetry between investors and firm managers is that if a firm raises new capital by issuing debt rather than by selling shares, it signals that the firm has very good prospects.

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Definitions:

Social Identity

Social identity is an individual's sense of who they are based on their group memberships, where the groups people belong to are an important source of pride and self-esteem.

Affirmative Action

Policies and measures aimed at increasing the representation of historically disadvantaged groups in various areas such as employment, education, and business.

Agreeableness

A personality trait characterized by attributes such as trust, altruism, kindness, affection, and other prosocial behaviors.

Good-natured

Having or characterized by a pleasant, agreeable, and cooperative disposition.