Which of the Following Is True

question 24

Multiple Choice

Which of the following is true?

• A) Companies can raise common equity only by issuing new shares of common stock.
• B) There is no opportunity cost associated with use of retained earnings as a source of common equity.
• C) Most large mature firms issue new shares of common stock on a regular basis.
• D) Companies can raise common equity by issuing new shares of common stock and through retained earnings.

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Definitions:

Net Income

Profit remaining after all operational, interest, and tax expenses have been subtracted from total revenue, reflected differently to avoid repetition.

Free Cash Flow

The amount of cash generated by a company after accounting for operational expenses and capital expenditures, indicating the company's ability to generate surplus cash.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, aimed at improving future operations.

Income Taxes

Taxes levied by governments on individuals or entities based on their income or profits.