If the Announcement of a New Equity Offering Causes Current

question 71

Multiple Choice

If the announcement of a new equity offering causes current equity values to drop,then signaling theory would predict that:

• A) supply of equity will outstrip demand.
• B) management knows the issue to be overpriced.
• C) the firm has no attractive investment opportunities.
• D) underwriters charge too high a spread.

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Definitions:

Behavior Therapy

A therapeutic approach that focuses on changing negative behaviors through various behavior modification techniques.

Attention Bias to Threat

The tendency to pay more attention to threatening stimuli than to neutral stimuli, often observed in anxiety disorders.

Beck's Cognitive Therapy

Beck's Cognitive Therapy is a form of psychotherapy that treats problems and boosts happiness by modifying dysfunctional emotions, behaviors, and thoughts.

Rogers' Client-Centered

A therapeutic approach developed by Carl Rogers emphasizing the therapist's empathy and the client's intrinsic worth, facilitating personal growth and self-acceptance.