At the present time, the price-earnings ratio (stock price per share divided by earnings per share) of other firms in Carson's industry is relatively low but should rise in the future. Why might this information affect the time at which Carson issues its stock?
Assume that Carson Company believes that issuing stock is an efficient means of circumventing the potential for high interest rates. Even if long-term interest rates have increased by the time it issues stock, Carson thinks that it would be insulated by issuing stock instead of bonds. Is this view correct?