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Consider a setting in which information is asymmetric and firm managers have information about firm prospects that outside investors do not have. Suppose that a

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Consider a setting in which information is asymmetric and firm managers have information about firm prospects that outside investors do not have. Suppose that a firm unexpectedly announces an equity issue. On announcement, the firm's share price should increase because equity is the most information sensitive security, and hence an equity issue is a positive signal about the firm. True False

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