Which of the following statements is incorrect about the methods of raising capital? I. In comparison to debt issuance expenses, the total direct costs of initial equity issues are more likely to be considerably smaller. II. Empirical evidence suggests that initial new equity issues are generally underpriced by investor excitement concerning a new issue. III. One of the common ways for start-up companies to access capital is through convertible securities issued by private equity or venture capital funds. IV. Empirical evidence suggests that upon the announcement of a seasoned equity issue, current stock prices generally drop. a. None of the other choice combinations are correct. b. IV only c. I only d. I and III only e. II and IV only Please fully explain

Which of the following statements is incorrect about the methods of raising capital? I. In comparison to debt issuance expenses, the total direct costs of initial equity issues are more likely to be considerably smaller. II. Empirical evidence suggests that initial new equity issues are generally underpriced by investor excitement concerning a new issue. III. One of the common ways for start-up companies to access capital is through convertible securities issued by private equity or venture capital funds. IV. Empirical evidence suggests that upon the announcement of a seasoned equity issue, current stock prices generally drop. a. None of the other choice combinations are correct. b. IV only c. I only d. I and III only e. II and IV only Please fully explain

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

Section: Chapter Questions

Problem 9QE

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