Which of the following is a reason for a firm to underprice new ...

[Lobcity]

Which of the following is a reason for a firm to underprice new issues?
 
  A) When the market is in equilibrium, additional demand for shares can be achieved only at a higher price.
  B) When additional shares are issued, each share's percent of ownership in a firm is diluted, thereby justifying a higher share value.
  C) When additional shares are issued, each share's percent of ownership in a firm is concentrated, thereby justifying a lower share value.
  D) When the market is in equilibrium, additional demand for shares can be achieved only at a lower price.

Question 2

Using the DuPont system of analysis, holding other factors constant, an increase in financial leverage will result in ________.
 
  A) an increase in the return on equity
  B) a decrease in the gross profit margin
  C) an increase in the gross profit margin
  D) an increase in retained earnings

[atrochim]

Answer to Question 1

D

Answer to Question 2

A

[Lobcity]

TYSM

[ryhom]

Gracias!