The Asymmetric Information Explanation of Capital Structure Suggests That Firms

question 5

True/False

The asymmetric information explanation of capital structure suggests that firms will issue new debt only when the managers believe the firm's stock is overvalued; as a result, issuing new debt is considered a negative signal that will result in a decline in share price.

---

Definitions:

Shutter Bar Open/Close

A user interface feature in some applications that allows for the expansion or collapse of sidebar menus for navigating between different sections or tools.

Navigation Pane

A feature in software applications that allows users to easily locate and manage different elements of a document or database, providing quick access to specific sections.

Navigation Pane

The Navigation Pane is a component of a software interface that allows users to easily browse and locate different sections or features of an application, often seen in file managers and email clients.

Rename

The action of changing the name of a file, folder, or other object in a computer system to something else.