Describe the interaction effect shown in the graph below.
Definitions:
Common Stock
A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the corporation's profits.
Retained Earnings
The portion of a company's profits that is kept or retained rather than paid out to shareholders as dividends, typically used for reinvestment in the business, paying off debt, or other purposes.
Additional Paid-in Capital
The amount of money investors pay above the par value of stocks during an equity financing round; it represents excess capital collected from shareholders.
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