Which of the following statements is correct?
A) One of the advantages of common stock financing is that there is no dilution of owners' equity,as there is with debt.
B) If the market price of a stock falls below its book value,the firm can be liquidated,with the book value proceeds then distributed to the shareholders.Thus,a stock's book value per share sets a floor below which the stock's market price is unlikely to fall.
C) The preemptive right gives a firm's preferred stockholders preference to assets over common stockholders in the event the firm is liquidated.
D) The steeper the demand curve for a firm's stock,the higher will be its flotation costs when it sells a new issue of common stock,other things held constant.
E) All of the above statements are false.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is correct?
A) One of the advantages of common stock financing is that there is no dilution of owners' equity,as there is with debt.
B) If the market price of a stock falls below its book value,the firm can be liquidated,with the book value proceeds then distributed to the shareholders.Thus,a stock's book value per share sets a floor below which the stock's market price is unlikely to fall.
C) The preemptive right gives a firm's preferred stockholders preference to assets over common stockholders in the event the firm is liquidated.
D) The steeper the demand curve for a firm's stock,the higher will be its flotation costs when it sells a new issue of common stock,other things held constant.
E) All of the above statements are false.

Which of the Following Statements Is Correct