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

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1. For a given level of earnings (E), net new investment (l), 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. Similarly, why must it repurchase shares if E > D + I and it desires to maintain a constant debt-equity ratio?

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Investments

ISBN: 9788120321014

6th Edition

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

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