What signal is sent to the market when a firm decides to issue new stock to raise capital?
A. Bond markets are overpriced
B. Bond markets are underpriced
C. Stock price is too low
D. Stock price is too high
When a public company issues stock, it is selling shares of ownership to the public in exchange for cash. The first time a company issues stock it is known as an initial public offering (IPO).
Answer and Explanation: 1
The best possible answer is D. Stock price is too high. When a company looks to issue new equity, it may be doing so because it can achieve a high...
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fromChapter 3 / Lesson 12
Learn about the different types of stocks and their significance in the market. See the meaning of stock trading and the classification of stocks with examples.