a. What are some possible reasons why the price of stock drops on the announcement of a
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a. What are some possible reasons why the price of stock drops on the announcement of a new equity issue?
b. Explain why we might expect a firm with a positive NPV investment to finance it with debt instead of equity.
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a There are several possible reasons why the price of a stock may drop on the announcement of a new equity issue Dilution of ownership When a company issues new shares of stock it increases the total ...View the full answer
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Related Book For 
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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