What exactly is the cost that they should consider

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Question: In his Pecking Order Theory, Stewart Myers argues that managers should consider the "cost" of obtaining various types of external financing in selecting a capital structure. What exactly is the "cost" that they should consider and why this is the relevant concern? Roughly, describe the magnitudes of these costs associated with the issue of various types of securities. When there are informational inefficiencies in markets, Myers also argues that corporate actions send important signals to market participants. Describe the signals that stock issues and bond issues might send to markets about the firms' prospects. Correspondingly, how do markets react to announcements of these two types of security issues?

Reference no: EM132031206

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