World Wide Delivery Service Corporation Develops a Way to Speed

question 159

Multiple Choice

World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs.We would expect that this would

• A)raise the demand for existing shares of the stock,causing the price to rise.
• B)decrease the demand for existing shares of the stock,causing the price to fall.
• C)raise the supply of the existing shares of stock,causing the price to rise.
• D)raise the supply of the existing shares of stock,causing the price to fall.

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Definitions:

Miller's Theory

Miller's Theory, part of the Modigliani-Miller theorem, posits that in perfect markets, the value of a company is unaffected by how it is financed, regardless of whether it's through debt or equity.

MM Propositions

The Modigliani-Miller propositions, fundamental theories in corporate finance that suggest, under certain conditions, the value of a firm is unaffected by its capital structure.

Financial Leverage

Utilizing borrowed money to enhance the possible gains from an investment.

Tax Rate

The proportion of tax that an individual or business must pay on their earnings.