Market price of stock when new equities are issued

Assignment Help Financial Management
Reference no: EM131982652

Which one of the following statements best describes a plausible reason for a decline in the market price of a stock when new equities are issued?

a) Managers issue new equity shares when the debt-equity ratio is too high.

b) Managers tend to issue equity only when they have no prospective positive net present value projects.

c) Managers tend to issue new equity shares when a firm has excess liquidity.

d) Managers of firms issue new equity shares only when the outstanding shares are undervalued in the market.

Reference no: EM131982652

Questions Cloud

How much must you save each year to meet retirement goal : If the interest rate is 7% per year, how much must you save each year to meet your retirement goal?
Calculate the present value of your payments : Calculate the present value of your payments to the bank if the interest rate is 4.75%
Describe few examples of your learning : Describe a few examples of your learning, What’s the applicable and generalization lesson.
What is the pv of the quarterback contract : What is the PV of the quarterback's contract? What is the PV of the receiver's contract?
Market price of stock when new equities are issued : Describes a plausible reason for a decline in the market price of a stock when new equities are issued?
Calculate the present value of future payoff : Calculate the present value of the future payoff, if the interest rate is 5%. Calculate the present value, if the interest rate is 9%.
On the basis of the current value of the business : On the basis of the current value of the business, what is the minimum price Maria should accept?
How many shares need to be sold : The Huang Corporation needs to raise $82 million to finance its expansion into new markets. how many shares need to be sold?
Calculate the conversion factor for bond maturing : Calculate the conversion factor for a bond maturing on January 1, 2037,paying a coupon of10%.

Reviews

Write a Review

Financial Management Questions & Answers

  Per-share earnings and dividends

What is the earnings per share figure? What is the dividends per share figure?

  The nominal return on your investment

You want to have $3 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 10 percent and the inflation rate is 4 percent. What real amount must you deposit each year to achieve your goal?

  Recommend for ashkan retirement plan

Which of the following asset allocations would you recommend for Ashkan’s retirement plan?

  Principal repayment and interest

You need $12,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 7% annual r..

  Stockholder equity investment? represent

what percentage of the total assets controlled does this? stockholder's equity investment? represent?

  Discuss the different types of notes-bills and bonds

Discuss the different types of notes, bills, and bonds that are sold in the U.S. Treasury market. Discuss the different participants in the markets. Discuss how arbitrage opportunities affect the different market participants and the types of interes..

  Compute the cost of equity capital using both the capm

Compute the cost of equity capital using both the CAPM and the Fama-French model. Is Softmike a value company or a growth company?

  Ganado and equity risk premiums

Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 4.00% is 4.20%,

  How much would it be willing to lend business owner

A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $1,200 per month for the next three years and then $2,400 per month for two years after that. If the bank is charging customers 8.00 percent APR, ..

  Compute the project irr and compute the project npv

Construct the pro forma and compute expected project cash flows. - Compute the project IRR. -  Compute the project NPV.

  What is the project terminal cash flow

The firm's corporate tax rate is 40%. What is the project's Terminal Cash Flow?

  Determine the number of units of product

Determine the number of units of product K to be manufactured in May and compute the May cash outlay for purchases of raw material A.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd