Which of the Following Factors Favor the Issuance of Equity

question 13

Multiple Choice

Which of the following factors favor the issuance of equity in the financing decision?
I.Market signaling
II.Distress costs
III.Management incentives
IV.Financial flexibility

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

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Definitions:

Bonds Payable

A financial accounting term for the value of bonds that a company is obligated to pay back at some future point.

Preferred Stock

A class of stock with preferential rights over common stock.

Current Ratio

A financial metric that assesses a firm's capacity to meet its short-term liabilities, which are due within a year, by dividing its current assets by its current liabilities.

Financial Information

Data regarding the financial status or performance of an entity, including income statements, balance sheets, and cash flow statements.