RM has analyzed the stock price impact fo exchange offers of debt for
equity or vice versa. in an exhange offer, the firm offers to trade
freshly issued securities for seasoned secureities in the hands of
investors. Thus a firm that wanted to move to a higher sebt ratio
could offer to trade new debt for outstanding shares. A firm that
wanted to move to a more conservative capital structure could offer to
trade new shares for outstanding debt securities. M found that debt
for equity exchanges were food news (stock price increased on
announcement) and equity-for-debt exchanges were bad news.
 a. are these results consistent with the trade off theory of capital structure?
 b. Are the results consistent with the evidence that investors refard
announcements of (i) stock issues as bad news, (ii) stock repurchases
as good news, and (iii) debt issue as no news, or at most trifling
disappointments?