Which of the following statements is true?
A) A firm's value tends to decrease when it announces its plans to issue senior debt securities since its debt ratio will increase dramatically.
B) Management tends to favor issuing equity over debt.
C) Management tends to favor issuing debt over equity.
D) A firm's value tends to increase when it announces its plans to issue junior securities since these securities have a lower cost of capital.
Correct Answer:
Verified
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