According to the Signaling Theory of Capital Structure, the Issuance

question 53

True/False

According to the signaling theory of capital structure, the issuance of equity for a firm with various financing alternatives signals that the firm has unfavorable prospects which it wants to share with new shareholders.

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Definitions:

Independent Assortment

The principle by Mendel stating that genes for different traits can segregate independently during the formation of gametes.

Heterozygous

A genetic condition where an individual has two different alleles of a particular gene or genes.

Allele

One of two or more alternative forms of a gene that arise by mutation and are found at the same place on a chromosome.

Blending Inheritance

An outdated theory of heredity proposing that the traits of offspring are a uniform blend of the parents' traits.