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Which price reaction will be most likely to occur

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Reference no: EM132505406

Question 1: Lawson Ltd makes an announcement about raising equity through a cash offer at a 15% discount to the current market value. There is no other news that may cause share price to change on the same day. Assume market is efficient. Which of the following price reaction will be most likely to occur according to the signaling theory or the adverse selection theory?

Select one:

a. It's equally likely that the share price will increase or decrease.

b. It's equally likely that the share price will decrease or remain unchanged.

c. Share price will remain unchanged.

d. Share price will increase.

e. Share price will decrease.

Reference no: EM132505406

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