The Cost of Common Stock Is Usually Greater Than the Simple

question 5

Multiple Choice

The cost of common stock is usually greater than the simple dividend yield because:

• A) investors perceive risk in common stock.
• B) investors expect both a current dividend and future growth.
• C) dividends are not tax-deductible.
• D) the company must make profits before it can pay dividends.

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Definitions:

Clinical Significance

An attribute of research results, referring to the practical utility of the treatment studied, which does not follow automatically from the results’ statistical significance.

Statistical Significance

An attribute of research results when it is extremely unlikely that they could have occurred purely by chance. The standard by which most research is judged as valuable or worthy of being published.

Practical Utility

Refers to the usefulness or applicability of something in real-world situations, often considering efficiency and cost-effectiveness.

Case Study

A research method involving an in-depth, detailed examination of a subject or its context.