Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

I. Pretax cost of debt is generally higher than the pretax cost of equity.
II. Interest is tax deductible.
III. Preferred dividends are tax deductible.
IV. Total cost of capital is always greater than or equal to cost of equity.

• A)II and IV
• B)II, III, and IV
• C)I, II, and IV
• D)II only

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Definitions:

Likely To Change

A condition or situation that has a high probability of undergoing alteration or modification in the near future.

Erik Erikson

A developmental psychologist and psychoanalyst known for his theory on the psychological development of human beings, notably the eight stages of human development.

Basic Trust

A sense of confidence and security in the world, typically developed in infancy, that the environment is predictable and reliable.

Responsive Caregivers

Individuals who attentively and sensitively respond to a child's needs, fostering emotional development and a sense of security.