A bonds with a 5% coupon as has a yield to maturity of 5%

Management has just discovered an excellent investment for which it needs additional funding. Relative to the discussion on asymmetric information, the firm should ________

A) finance with new common stock if management believes the firm is undervalued B) finance with debt if management believes the firm is undervalued C) finance with debt if management believes the firm is overvalued D) finance with preferred stock if the firm is at value

The risks associated with over-production are likely of greatest concern to which company below?

A) a cereal manufacturer B) a manufacturer that produces designer clothing C) a manufacturer of printer paper D) a mailbox manufacturer