FINANCE

Finance

Finance

Issue of Common Stock :

In efficient market, it is assumed that every person in the market has equal knowledge of the market. In an efficient stock market, one investor cannot receive higher return than all other investors for exactly the same type of securities in which they are trading. They all will receive average rate of return prevailing in the efficient market. It is very difficult for managers to dumb down the investors in this situation. Issuing common stock, when price has risen in the efficient market would send a bad impression to the investors as this will reduce the ...