Question

Why does the stock price tend to drop when firms announce a seasoned equity offering? Select...

Why does the stock price tend to drop when firms announce a seasoned equity offering?
Select one:
a. Because it signals that the issuing firm could be in financial trouble.
b. Because the new shares will dilute the earnings of existing shareholders and so the company stock cannot be worth the same amount anymore.
c. The price only drops when firms state that they intend to use the new funds to undertake projects that have a negative net present value.
d. Because investors know that the new issue is underpriced and so the existing shares must adjust to account for this

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
39.Why does the stock price tend to drop when firms announce a seasoned equity offering? Select...
39.Why does the stock price tend to drop when firms announce a seasoned equity offering? Select one:a. Because it signals that the issuing firm could be in financial trouble.b. Because the new shares will dilute the earnings of existing shareholders and so the company stock cannot be worth the same amount anymore.c. The price only drops when firms state that they intend to use the new funds to undertake projects that have a negative net present value.d. Because investors know...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated from Louisiana State University. She set to work opening a coffee shop in Baton Rouge called HannaH and found a perfect location in a new development. Using a $50,000 inheritance to finance the venture together with her own sweat equity, she started the business on August 1, 1984 as a sole proprietorship. The shop was profitable in the first year. Hannah found, however, that...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT