Stakeholders Prefer Internally Generated Funds to External Funds Because ______

question 4

Multiple Choice

Stakeholders prefer internally generated funds to external funds because ______.

• A) internal funds avoid the discipline of the financial markets
• B) internal funds avoid the transactions costs of external issues
• C) they indicate the corporation has free cash flow
• D) More than one of the above
• E) None of the above

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Definitions:

No-Par

Refers to stock issued without a par value, meaning it has not been assigned a nominal face value.

Market Value

The ongoing rate at which one can buy or sell an asset or service.

Weighted-Average

A method of calculating an average that takes into account the importance, or weight, of each value.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.