Which Statement Is Correct

question 7

Multiple Choice

Which statement is correct?

• A)The financial market generally reacts the same to a new issue of equity as it does to a new issue of debt as long as the issuer is the same.
• B)Issuing new equity shares is always viewed by the market as a positive event.
• C)Informed managers tend to issue new securities when the existing securities are underpriced.
• D)A decline in the price of existing stock when a new issue is released is a direct cost of selling securities.
• E)A firm's existing shareholders would prefer that new securities be issued when those securities are overpriced rather than underpriced.

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Definitions:

Qualifications

The skills, experience, and education required to perform a job or task, or criteria to receive a benefit.

File

To file means to submit documents officially to a required authority, often used in the context of filing taxes or legal paperwork.

Head of Household

A filing status for tax purposes that provides higher standard deductions and lower tax rates for individuals who are unmarried and support dependents.

Taxable Income

The amount of income that is used to calculate an individual's or a company's income tax due. It is the gross income minus deductions and exemptions allowed by the tax code.