Question

capital market conditions can affect the timing of a new equity issue because______. a. issuing new...

capital market conditions can affect the timing of a new equity issue because______.
a. issuing new equity may be harder when stock prices are rising.
b. issuing new equity may be easier when stock prices are rising
c. issuing new equity may be harder when stock prices are falling
d. b and c

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Answer #1

Answer to the Question is Option

D) B and C

When the stock prices are rising , it indicates that the corporation is performing well,Investors will be attracted to the corporation and when the corporation issues new equity the investors would purchase the same. The coropartion will not face difficulty in rasing additonal capital.

On the other hand when the prices are falling , it indicates an unattractive investment opportunity. There for investors may be reluctant in the new issue of equity share which makes it harder

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