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A firm just announced the issue of 100,000 shares through a new SEO
A firm just announced the issue of 100,000 shares through a new SEO. Which one of the following statements is more correct?
Multiple Choice
The cost of the SEO far exceeds the cost of the IPO
The company’s stock price on average declines because the SEO indicates the firm has run out of profitable investments
The company’s stock price on average declines because the company is likely overvalued
The company’s stock price on average declines because issuing public securities increases the risk of bankruptcy
None of the above
Expert Solution
The company’s stock price on average declines because the company is likely overvalued is the only correct option.
Option 3 is correct.
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