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8. A CFO is proposing that her company goes to the debt market to issue a new bond, because current interest rates are low.
8. A CFO is proposing that her company goes to the debt market to issue a new bond, because current interest rates are low. In particular, the CFO can use the proceeds of the bond issuance to increase stock repurchases. The CFO is arguing that since debt is cheaper than equity, stock prices will go up. Is the CFO right? Discuss. (2 paragraphs maximum). (15 points)
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
13th Edition
9780132738729, 136119468, 132738724, 978-0136119463
