You are the assistant to the CFO of a major non-financial corporation. The CFO wants your guidance on the pros and cons of issuing debt and/or equity to raise capital in 2012.
What is your guidance on this issue given the following five possible policy changes in the year ahead?
a. Increased income taxes on dividends and capital gains.
b. The Fed expands its balance sheet by purchasing more Treasury notes and bonds.
c. Dollar depreciation is expected along with a decline by foreign investors willing to buy U.S. dollar–denominated fixed-income products.
d. The increasing risk that inflation concerns will rise in the year ahead.
e. Slower overall economic growth is expected and in recent months this has driven down P/E ratios.