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estion 30 Consider a firm with a debt-to-equity (D/E) ratio of 1.5 and an effective...

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estion 30 Consider a firm with a debt-to-equity (D/E) ratio of 1.5 and an effective tax-rate of 21%. At current debt levels, the cost of debt ca issuing more shares. Following the announcement, which of the following alternative(s) is(are) correct: 1. The stock price should fall. II. The market value of equity should decrease. III. The market value of the firm should decrease. Only! Only I Only In Only I and III All alternatives are correct. t can be considered to be risk-free. The firm just announced that it is planning to reduce its leverage by buying back bonds and

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