Studies on the Timing of Corporate Issues of New Equities

question 27

Multiple Choice

Studies on the timing of corporate issues of new equities suggest that corporations tend to offer:

• A) new issues after stock price increases. This behavior is consistent with the weak form of the efficient market hypothesis.
• B) new issues after stock price increases. This behavior is inconsistent with the weak form of the efficient market hypothesis.
• C) new issues randomly with regard to stock price changes. This behavior is consistent with the weak form of the efficient market hypothesis.
• D) new issues randomly with regard to stock price changes. This behavior is inconsistent with the weak form of the efficient market hypothesis.

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Definitions:

Lower Orders

Refers to people of lower social, economic, or political status in a given society, often used historically.

Colonies-Turned-States

Refers to former colonies that transitioned into becoming states, particularly in contexts like the United States where British colonies gained independence and statehood.

Postwar State Constitutions

Constitutions adopted by states in the aftermath of a war, reflecting the social, political, and economic changes brought about by the conflict.