This topic contains a solution. Click here to go to the answer

Author Question: Which of the following is a reason for a firm to underprice new issues? A) When the market is in ... (Read 38 times)

Lobcity

  • Hero Member
  • *****
  • Posts: 524
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



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

atrochim

  • Sr. Member
  • ****
  • Posts: 331
Answer to Question 1

D

Answer to Question 2

A




Lobcity

  • Member
  • Posts: 524
Reply 2 on: Jul 11, 2018
YES! Correct, THANKS for helping me on my review


dyrone

  • Member
  • Posts: 322
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

Did you know?

The Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

Did you know?

The term pharmacology is derived from the Greek words pharmakon("claim, medicine, poison, or remedy") and logos ("study").

Did you know?

The Centers for Disease Control and Prevention has released reports detailing the deaths of infants (younger than 1 year of age) who died after being given cold and cough medications. This underscores the importance of educating parents that children younger than 2 years of age should never be given over-the-counter cold and cough medications without consulting their physicians.

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

For a complete list of videos, visit our video library