For a given level of earnings (E), net new investment (I), and dividends (D), explain why a

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For a given level of earnings (E), net new investment (I), and dividends (D), explain why a firm must issue new stock if E < D + I and it desires to maintain a constant debt-equity ratio. Why must it repurchase shares if E > D + I and it desires to maintain a constant debt-equity ratio?
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Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

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