Which of the Following Statements Is True

question 12

Multiple Choice

Which of the following statements is true?

• A)If a firm has a project that management believes will be very successful, management is more likely to finance the project with debt financing than with new equity.
• B)Issuing new equity is a positive signal to investors.
• C)Issuing debt is a negative signal to investors.
• D)If a firm has a project that management believes will be very successful, management is more likely to finance the project with equity than with debt.

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Definitions:

Total Economic

An encompassing term that may refer to the complete economic activities or output of a specific region or sector.

Total Revenue

Total revenue is the total amount of money received by a company for goods sold or services provided during a specific period.

Competitive Firm

A company operating in a market where there are many buyers and sellers, each with negligible impact on market prices and conditions.

Profit-maximizing

The process of adjusting production and operational variables to achieve the highest possible profit margins.