Which one of the following statements regarding stock issuances is true?
A) They are not always better than debt for raising capital.
B) Their effect on stock price is not a concern.
C) They do not require a company to share future earnings with new shareholders.
D) Dilution of ownership is not a special concern.
E) Issuing stock when interest rates are low is a sound strategy.

Question

Quizplus · Accepted Answer

Issuing stock is not always better than debt for raising capital because it can lead to dilution of ownership and sharing future earnings with new shareholders, whereas debt does not dilute ownership and may be cheaper when interest rates are low.

Which One of the Following Statements Regarding Stock Issuances Is