Which Statement Is Correct

Which statement is correct?

A) The financial market generally reacts the same to a new issue of equity as it does to a new issue of debt as long as the issuer is the same.
B) Issuing new equity shares is always viewed by the market as a positive event.
C) Informed managers tend to issue new securities when the existing securities are underpriced.
D) A decline in the price of existing stock when a new issue is released is a direct cost of selling securities.
E) A firm's existing shareholders would prefer that new securities be issued when those securities are overpriced rather than underpriced.

Correct Answer:

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