Which of the Following Have Been Offered as Justification for Stock

question 51

Multiple Choice

Which of the following have been offered as justification for stock price declines following an SEO announcement?
I.Investors assume managers issue stock when shares are overvalued.
II.Corporate taxes imposed on stock offerings lower the value of the issuer's cash flows.
III.Issuing debt may be considered a signal that the issuer has too much debt.
IV.Issue costs reduce the value of the issuing firm.

• A)I and III only
• B)II and IV only
• C)I,III,and IV only
• D)II,III,and IV only
• E)I,II,III,and IV

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Definitions:

Comparative Financial Statements

Financial statements that present financial data for two or more periods side by side, facilitating period-to-period comparisons.

Solvency

Solvency is a company's ability to meet its long-term financial obligations and continue its operations in the long term, often assessed by looking at financial ratios.

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation, calculated as total assets minus total liabilities.

Return

The gain or loss on an investment over a specified period, usually expressed as a percentage.