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vladimir2022 [97]
3 years ago
12

g According to the signaling theory of capital structure, a firm with favorable prospects should raise new capital by issuing __

__ and a firm with unfavorable prospects raise new capital by issuing ____.
Business
1 answer:
Daniel [21]3 years ago
4 0

Answer:

The correct answer is letter "A": debt; equity.

Explanation:

Economists Franco Modigliani (1918-2003) y Merton Miller (1923-2000) in the signaling theory assume that investors and managers have the same information. Differences were caused as the result of companies issuing new stock when its price was overvalued or bonds when their price is undervalued.

Under that scenario, <em>managers usually were confident in their firms' ability to generate capital. Then, they tended to issue new debt. However,  managers discouraged usually issued new equity in the form of stocks or bonds.</em>

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If the quantity supplied by producers is relatively insensitive to price changes, supply is ______. Multiple choice question.
luda_lava [24]

If the quantity supplied by producers is relatively insensitive to price changes, supply is price inelastic.

Inelastic demand is demand for which the change in quantity demanded is small due to changes in price. Demand is elastic if the formula yields an absolute value greater than 1. In other words, quantity changes faster than price. If the value is less than 1, demand is inelastic.

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<em>Your question is incomplete. please read below to find the full content.</em>

If the quantity supplied by producers is relatively insensitive to price changes, supply is ______. Multiple choice question.

price inelastic.

quantity demanded.

relative price increase.

change in price.

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2 years ago
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C. Display would be the most accurate
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