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Which statement is correct? When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm

Which statement is correct?

When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm is overvalued. The stock price increases as a result of this interpretation.

When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm is overvalued. The stock price drops as a result of this interpretation.

When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price decreases as a result of this interpretation.

When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price increases as a result of this interpretation.

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Previous Question Next Question

		When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm is overvalued. The stock price increases as a result of this interpretation.
		When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm is overvalued. The stock price drops as a result of this interpretation.
		When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price decreases as a result of this interpretation.
		When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price increases as a result of this interpretation.