Which of the following is not a spontaneous source of financing?
(a)Accrued taxes
(b)Bank loans
(c)Accrued wages
(d)Accounts payable
Correct option:
Reason or logic:
Suppose you know that your firm is facing relatively poor prospects but needs new capital. If you also know that investors do not have this information, signaling theory would predict that you would:
(A). Issue debt to maintain the returns of equity holders.
(:). Issue equity to share the burden of decreased equity returns between old and new shareholders.
(c)Both A and B are correct
(d)None of the given option is correct
Correct option:
Reason or logic:
(a)Accrued taxes
(b)Bank loans
(c)Accrued wages
(d)Accounts payable
Correct option:
Reason or logic:
Suppose you know that your firm is facing relatively poor prospects but needs new capital. If you also know that investors do not have this information, signaling theory would predict that you would:
(A). Issue debt to maintain the returns of equity holders.
(:). Issue equity to share the burden of decreased equity returns between old and new shareholders.
(c)Both A and B are correct
(d)None of the given option is correct
Correct option:
Reason or logic: