According to the Pecking Order Theory of Capital Structure,why Do

question 17

Multiple Choice

According to the pecking order theory of capital structure,why do firms avoid issuing equity?

• A) Because fees associated with issuing new equity are so high
• B) Because they want to avoid dilution of earnings per share
• C) Because they don't want to commit to paying dividends on the new equity
• D) Because equity issuance signals that managers believe their stock is overvalued,which causes the price of the stock to fall

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Definitions:

Anterior Pituitary

The front portion of the pituitary gland, producing and secreting various hormones that regulate several physiological processes including growth, reproduction, and metabolism.

Hypothalamus

A region of the brain responsible for the regulation of certain metabolic processes and other activities of the autonomic nervous system, including temperature control, hunger, and thirst.

Capillary Bed

Networks of small blood vessels that facilitate the exchange of materials (such as oxygen and carbon dioxide) between the blood and tissues.

Sweat Gland

A specialized epidermal structure involved in the production of sweat, playing a key role in body temperature regulation.