A valuable firm will tend to:
A)see its stock price increase if it issues debt beyond its optimal debt level.
B)issue more debt than a less valuable firm of comparable size.
C)reduce its debt level as a positive signal for the firm.
D)issue debt,but only on a temporary basis purely to fool investors regarding the firm's value.
E)see its stock price increase when it announces an exchange offer that decreases its leverage.

Question

Quizplus · Accepted Answer

Valuable firms often have more stable cash flows and can support higher levels of debt, making them more likely to issue more debt compared to less valuable firms of similar size.

A Valuable Firm Will Tend To